Reliance Jio says won't derive any benefits from IUC cut

Reliance Jio says won't derive any benefits from IUC cut

The Telecom Regulatory Authority of India (TRAI) issued a notification on Tuesday stating that Interconnection Usage Charges (IUC) will be reduced from 14 paise per minute to 6 paise per minute starting October 2017 and this might benefit users in the long run.

Vodafone India, the market's second-biggest carrier, described the move as "retrograde" and said it could affect investment in network coverage in rural areas. Trai said the charges will be completely scrapped from January 1, 2020.

"As part of an industry, which continues to be a critical driving force behind the economic growth in the country, we are genuinely dismayed by this decision", reads an Airtel official statement.

Goldman Sachs has revised its estimates upwards for the shares of India's most valued company to Rs 905 from earlier Rs 875, as the research firm sees $250-400 million increase in EBITDA for Reliance Jio after the IUC cut.

Kotak Institutional Equities, the institutional India brokerage, predicted that Jio, which now pays close to $1 billion in interconnection fees, will save $550-$600 million (30-33 rupees per user) annually as result to the new charges. Reliance Jio uses Voice-Over-LTE technology to make phone calls.

"It is appalling that the incumbent operators have still gone ahead and made untrue and baseless allegations against the process for determination of IUC or the regulator". One can argue that voice call charges are also factored into the current tariffs but telcos can argue that if voice calls are offered for free, there's no way they can reduce the existing tariffs because of lower IUC charges. Thus, the latest TRAI regulation is expected to translate into savings for RJio in terms of the IUC it had to pay to other operators - as per RJio's financials, its IUC charges for FY2017 stood at Rs. 2,589 crore, for around seven months of service.

Kotak Institutional Equities said Jio, which now pays close to $1 billion in interconnection fees, would have annualized savings of $550-$600 million from the fee cut, translating to 30-33 rupees per user.

Competitive pressures have encouraged consolidation, and three strong telcos have emerged from the shake-out - Bharti, Jio and the combined entity of Vodafone India and Idea Cellular, which are due to merge.

"Operators with large subscriber bases tend to be net recipients of these interconnection fees".

TRAI Slashes IUC By 57%

.

The TRAI said: "Further, the cost of termination of calls will drastically come down over a period of two years and very small residual value, if any, can be absorbed by the TSPs in their tariff offerings".

Related Articles

  • Rohingya villages targets of 'systematic burnings' by Myanmar army: Amnesty

    Rohingya villages targets of 'systematic burnings' by Myanmar army: Amnesty

    Muhammad Yunus, the 2006 Peace Prize laureate, has sent a letter with the signatures of 12 Nobel laureates to the U.N. She also said she would raise the Rohingya issue at the UN General Assembly in NY later this month.
    SpaceX Releases Fail Video Of All Of Its Rocket Explosions

    SpaceX Releases Fail Video Of All Of Its Rocket Explosions

    Knowing they have started to crack the problem then, it's understandable Musk approached the " blooper reel " cheerfully. Elon Musk's company lost many boosters as it tried to figure out how to make a successful landing.
    8 dead in Florida nursing home Irma left without air conditioning

    8 dead in Florida nursing home Irma left without air conditioning

    The Electric Cooperatives of SC reported almost 15,000 customers without power, majority in Oconee and Charleston counties. At least six nursing home residents died today in Florida after being left with no A/C following Hurricane Irma .
  • Hurricane Maria hits land as deadly CATEGORY 5 storm

    Hurricane Maria hits land as deadly CATEGORY 5 storm

    In this photo A auto passes next to a banner warning of a "Red Alert" for rains as Hurricane Maria approaches in Pointe-a-Pitre. Ms Patel said British troops, police and aid experts were "working relentlessly" to help the victims of Hurricane Irma .

    Bernardo Silva expects to improve by playing for Manchester City

    City, meanwhile, have slammed in nine goals in their past two games and head to Watford full of confidence. Sergio Aguero has three goals in his last three league appearances against the London side.
    President, First Lady to Visit Florida in Aftermath of Hurricane Irma

    President, First Lady to Visit Florida in Aftermath of Hurricane Irma

    Irma made landfall in Puerto Rico and Florida early Saturday morning as a Category 4 hurricane with 130 miles per hour winds. Irma has devastated Florida , causing at least 25 deaths as of Wednesday morning, and leaving millions without power.
  • Death toll from Mexico quake rises sharply

    Death toll from Mexico quake rises sharply

    Just hours earlier all the buildings in the city had carried out preparation drills for such an event on the anniversary. At least 10 people died in Mexico state, which lies just to the west of Mexico City , while in Guerrero one person died.
    Google Launching the New

    Google Launching the New "Tez App" In India for Mobile Payment System

    Moreover, the app is available in multiple local languages including Hindi, Bengali, Gujarati, Marathi, Tamil, Kannada and Telegu. Business owners and merchants will be able to accept payments using their personal accounts in the Tez app starting Monday.
    Donald Trump Attacks ESPN 'Apologize For Untruth!'

    Donald Trump Attacks ESPN 'Apologize For Untruth!'

    It turns out ESPN may have tried to punish " SC6 " anchor Jemele Hill after all. She added her respect for ESPN and her co-workers "remains unconditional".
  • 'Cowboy Bebop' director made a 'Blade Runner' animated short

    'Cowboy Bebop' director made a 'Blade Runner' animated short

    The first short focused on Jared Leto's Jared Leto's villainous Niander Wallace while the latest is titled 2048: Nowhere to Run . Blade Runner 2022 will also feature music from Kuedo and Miguel Atwood Ferguson, who's worked with Flying Lotus in the past.
    Adam Levine and Behati Prinsloo expecting 2nd child

    Adam Levine and Behati Prinsloo expecting 2nd child

    Posting a picture of her growing baby bump, the model announced that she is pregnant again. The 28-year-old South African model is expecting her second child in the coming months.
    Rodman's insane  plan to 'straighten out' US, Nth Korea tensions

    Rodman's insane plan to 'straighten out' US, Nth Korea tensions

    Former basketball player Dennis Rodman has revealed that he has had some karaoke sing-songs with North Korea leader Kim Jong-un. Rodman also said "there would be a great possibility things would happen" if Trump and Kim could sit and just talk things out.