Don’t reduce IUC: Singtel to Telecom Minister

Prior to the Telecom Regulatory Authority of India’ decision on Tuesday to cut mobile interconnect usage charges (IUC), Singapore Telecommunications Ltd (Singtel), one of the largest investors and stakeholders in Bharti Airtel, had written a letter to Telecom Minister Manoj Sinha asking him not to do slash IUC.

In the letter, which was written before TRAI’s decision was made public, the company showed concern at the potential introduction of a Bill-and-Keep (BAK) regime or a reduction in IUC.

“We do not believe that the introduction of a BAK regime or a reduction in IUC is in the long-term interests of India’s telecom sector,” Chua Sock Koong, Group Chief Executive Officer, Singtel, said in the letter.

The letter, accessed by BusinessLine , says that introducing a BAK regime or reducing the IUC in India is likely to have adverse consequences for investment and ultimately, it will be to the detriment of consumers.

“It is important to recognise that investments in network take place over time. When mobile operators decide on investment levels, they reasonably anticipate IUC for terminating traffic on their network,” Koong pointed out.

He said that introducing a BAK regime or reducing the IUC at this juncture would “simply mean that there is less revenue available to mobile operators to finance both their existing and future investments.”

It is highly likely to dis-incentivise mobile operators to continue to invest and innovate prospectively. This is particularly so with the shortening of the technology cycles where operators are required to invest in new technology and recover that investment over shorter time frames, he said.

Singtel It has around 36 per cent of stake in Bharti Airtel.

COMMENT NOW