The new charges will be implemented from October 1, the telecom regulator said in a statement.
The shares of telecom firms Bharti Airtel and Idea Cellular, fell up to 7% on BSE on Wednesday after the Telecom Regulatory Authority of India (TRAI) cut termination charge for all mobile to mobile calls to 6 paise per minute from 14 paise.
The new charges will be implemented from October 1, the telecom regulator said in a statement.
From January 2020, IUC will be brought down to zero for all domestic calls, which implies that there won’t be any payment for calls landing on other telcos’ networks.
The announcement came in the evening on Tuesday. However, in early trade today, shares of Idea Cellular slipped 7% to Rs 76.85, while Bharti Airtel was down 6% to Rs 370.
But the Trai's decision brought some goos news for Reliance Industries (RIL), the company's share hit a new high of Rs 872 . Media reports suggest that the firm would save Rs 3,800 crore annually from this move.
Meanwhile, Bharti Airtel slammed the Trai's order and said that the company was disappointed with the regulation that comes at a time when the telecom sector is already going through times.
DNA Money had reported on August 15 that IUC is likely to come down to 5-8 paise per minute for calls in India.
According to sources, IUC at 6 paise will lead to a gain of about Rs 4,000 crore annually to Reliance Jio.
It would mean an estimated annual loss of Rs 1,500-2,000 crore for Airtel, Rs 1,500 crore for Vodafone and Rs 1,200 crore for Idea Cellular, they said. These figures could not be independently confirmed.
While the incumbent players had demanded an increase in IUC to 35 paise, Reliance Jio (RJio) wanted it to be scrapped and a 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.
It is learnt that the top operators may challenge the Trai regulation in the court.
IUC is the charge payable by a telecom service provider whose subscriber originates the call to the telecom service provider in whose network the call terminates.
The current IUC Regulation was notified on February 23, 2015, and came into effect on March 1, 2015.
Trai had issued a consultation paper for Review of Interconnection Usage charges in August last year.
IUC had become a bone of contention between the incumbent telecom players and RJio.
However, there won't be any impact in the mobile tariffs as the prices in India are already at their lowest level and voice calls are virtually free now after the entry of RJio.
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.
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