RJio’s phone will hit sector, erode revenue: Vodafone to telecom panel

Press Trust of India New Delhi | Updated on January 09, 2018

Seeks cut in interest rate applied to deferred spectrum payments

The country’s second-largest telecom player, Vodafone, expects RJio’s ‘effective free phone’ with unlimited calling, to erode operators’ revenues that are already under pressure, and sought reduction in various levies imposed by the government as a breather to the industry.

“The new operator continues to aggressively under-price its services, including announcing the launch of the ‘Effective Zero Price Feature Phone’ with unlimited voice. This is likely to cause further erosion in revenue for existing operators,” the company said in a letter to Telecom Commission Member (Finance) Anuradha Mitra.

Reliance Industries Chairman and MD Mukesh Ambani had recently launched JioPhone, a 4G feature phone at a one-time fully refundable deposit of ₹1,500 per unit. Jio is slated to beta test the low-cost phone from August 15.

Declining revenues

Vodafone said there has been a continuous decline in its revenue from telecom services, and it has recorded a further decline of 3.41 per cent in the the quarter ended June.

It also called for reducing the interest rate applied to deferred spectrum payments. “A reduction in the interest rate applied for deferred spectrum payments is necessary to reduce burden on operators. Hence, we have requested reduction from 10 per cent to G- Sec rate of 6.25-6.5 per cent on deferred payment,” the letter said. Vodafone said the revenue share with the government imposes a huge burden on telecom operators even though companies purchase spectrum at market price.

The company requested the DoT to consider the recommendation of the Telecom Regulatory Authority of India to reduce Universal Service Obligation Fund from 5 per cent to 3 per cent as private operators have already rolled out services in rural areas and the current call termination rates are very low.

“Despite having rolled out in rural areas, we still have to pay USOF, and the mobile termination rates are also below cost, which adversely impact us since majority of the calls in the rural areas are incoming.”.

At present, a telecom operator charges 14 paise for every incoming call that it gets from the network of other operators.

“Therefore, we earnestly request kind consideration and early decision on reduction in the USOF levy from 5 per cent to 3 per cent and reduction of interest charges along with rescheduling the payment period, which has been tabled before the DoT and the IMG (inter-ministerial group),” Vodafone said.

Published on August 15, 2017

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