In the last five years, there has been a significant loss to Airtel as the termination charges have been well below the cost of 30-35 paise/min
The war of words over interconnection usage charges (IUC) refuses to die down.
Bharti Airtel has shot off a letter to Telecom Regulatory Authority of India (Trai) saying it has suffered a loss on account of below cost IUC at about Rs 6,800 crore in the last five years on present value basis.
Airtel dismissed the data provided by Reliance Jio, which claimed that existing operators benefitted by about Rs 1 lakh crore in the last five years alone due to non-implementation of the Trai report of 2011, it said in a letter to Trai chairman R S Sharma dated September 6.
“Airtel has not made any gains on account of IUC. ...The misrepresentation of data is yet another attempt by Reliance Jio to distort facts to show other operators in a bad light and create policy bias in its favour,” the letter said.
In the last five years, there has been a significant loss to Airtel as the termination charges have been well below the cost of 30-35 paise/minute. Airtel has, therefore, incurred a loss of 10-16 paise/minute on an ongoing basis as the termination charges have been 20 paise/minute from FY 2012-13 to FY 2014-15 and 14 paise/min from FY 2015-16, the letter said.
Currently, IUC is fixed at 14 paise/minutes.
The letter said even if Reliance Jio claims were assumed to be correct, the present value of surplus recovery will be only Rs 7,443 crore and not Rs 46,958 crore as claimed by Reliance Jio.
The letter came amidst reports that Trai is considering reducing IUC charges to 5-8 paisa per minute.
A few weeks back, Vodafone Group CEO Vittorio Colao had in a letter to telecom minister Manoj Sinha said, “We are seriously alarmed to see reports that the regulator (Trai) is considering a reduction in mobile termination charges/ interconnection usage charges at a time when the industry is facing such immense hardships…Any move to further reduce it further risks destroying the very companies that have invested to build this industry.” The existing rate of 14 paise for MTC is already below the current cost of about 30 paise, he had said.
For legacy players such as Bharti Airtel, Vodafone and Idea, a lower IUC would mean a dip in revenues at a time when they are already struggling in a highly competitive telecom sector. While the incumbent players have demanded an increase in IUC to 35 paise, RJio wants it to be scrapped and shift to the bill-and-keep regime, under which operators only keep a record of incoming calls on their network but do not raise any demand from other operators.
The existing players – Airtel, Vodafone and Idea Cellular – have been at a war of words with Reliance Jio over the issue.
Colao had said Reliance Jio, which has been pitching for zero IUC, has assumed continued growth of an “implausible level of paid traffic” on its network. However, the present traffic levels are a result of extreme promotional activity and generated by incurring huge losses.
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