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Reliance Jio hits back at Airtel over IUC issue, writes to TRAI

Trai is close to finalising its views on IUC and has already conducted open house session, where all telecom players presented their views on the contentious issue

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Reliance Jio hits back at Airtel over IUC issue, writes to TRAI
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Days after Bharti Airtel alleged that Reliance Jio distorts facts to create policy bias, the new entrant RJio hit back saying contentions of Airtel are flawed and misleading in nature.

The war of words between the two telecom players on the issue of interconnection usage charges (IUC) has been going on for quite some time.

In a letter to telecom regulator Telecom Regulatory Authority of India (Trai) dated September 11, RJio said, “All the contentions of Airtel are fallacious, not based on true facts and are misleading in nature. The Authority (Trai) may take appropriate action against Airtel for such mischievous and frivolous submissions made well post the time allocated for additional submissions by the Authority during the open house discussions.”

RJio said the data related to IUC receipts are not disclosed by operators and therefore, it estimated the excess recovery based on certain assumptions and disclosures made by Airtel as part of its financial results.

Trai is close to finalising its views on IUC and has already conducted open house session, where all telecom players presented their views on the contentious issue.

Last week, Airtel in a letter to Trai said it was suffering a loss on account of below-cost IUC at about Rs 6,800 crore in the last five years on the 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 had said.

However, according to the letter by RJio, the present value of gross surplus recovery by Airtel stands at Rs 46,958 crore.

According to Airtel, 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 letters are coming amidst reports that Trai is considering reducing IUC charges to 5-8 paisa per minute. Trai is meeting on September 14 to take a final call on the issue.

A few weeks back, UK’s Vodafone Group CEO Vittorio Colao had, in a letter to telecom minister Manoj Sinha, said that any move to further reduce IUC will risk destroying the very companies that have invested to build this industry.

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. Currently, IUC is fixed at 14 paisa per minute.

While the incumbent players have demanded an increase in IUC to 35 paise, RJio wants it to be scrapped and shifted 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.

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