Older Telecom Companies to Challenge Cut in IUC

The move of TRAI, the telecom regulator, to slash IUC (interconnect usage charges) by more than 50% is anticipated to elevate troubles for older mobile firms, such as Vodafone, Bharti Airtel, and Idea Cellular, even as Reliance Jio will come up as the largest gainer. Jio receives from having a 4G-only (VoLTE) and modern Internet network. And a reduced IUC will indicate that it will have to give fewer charges to rival firms for ending calls of its users.

Jio, whose entrance in September 2016 disturbed economies of older companies, is anticipated to declare lower charges shortly. Its entry offer at this moment starts at Rs 149, and sources claim the firm may amend this shortly to factor in reduced IUC that come in live from next month. Market experts claimed that TRAI’s move will put more stress on the financial numbers and business of older telecom companies. “The bleeding will be more now, and relief is nowhere around the corner,” claimed a top analyst, while asking for being unnamed since he counsels most of the firms.

Vodafone India and Idea are by now in losses, and are carrying out a merger to bang synergies. Airtel has witnessed its profitability drop by more than 70% in past 2 quarters. The new rule might see the firm report even more challenging numbers, experts claimed.

The older players, who are represented by COAI (Cellular Operators Association of India), the industry lobby body, have been let down by the decision of TRAI to slash IUC rates from 14 Paise to 6 Paise per minute. “It is a huge bang to the sector,” director-general of COAI, Rajan Mathews, claimed to the media in an interview. Mathews claimed that TRAI needs to be transparent and fair, and lowering charges will indicate that firms will not have sufficient money to spend in new technology.

He claimed that older firms will now head to court to defy order of TRAI. “It has to head to the high court, and clearly over the coming few days it will be done. The bulk of COAI members have almost made a decision.” Jio is also an affiliate of COAI, even though it has almost been at loggerheads with the opinions represented by the industry body or Mathews.

While Jio had been sturdily looking for a cut in IUC so as to support 4G and new technologies, the need has been opposed by rival telecom companies.