From January 1, 2021, the termination charge for wireless-to- wireless domestic calls shall be zero, the Telecom Regulatory Authority of India (TRAI) said on Tuesday, while issuing regulations on ‘Domestic Call Termination Charges’.

The Interconnection Usage Charges (IUC) of 6 paise per minute on mobile calls will continue till December 31, 2020, the sector regulator said.

This should come as relief to Vodafone Idea (VIL) and Bharti Airtel, which had wanted the zero-IUC regime put off because neither earns a significant proportion of revenue via IUC. However, Mukesh Ambani-owned Reliance Jio had opposed any deferral as more than 60 per cent of its total traffic is outgoing.

TRAI’s original deadline to phase out IUC was January 1, 2020. In September, it undertook a review of the same and its consultation paper mentioned that the progress of VoLTE adoption has been slower than expected, suggesting that it may keep the IUC regime going for some more time.

“For wireless-to-wireless domestic calls, termination charge would continue to remain as six paise per minute up to December 31, 2020. From January 1, 2021 onwards, the termination charge for wireless-to-wireless domestic calls shall be zero,” it said in the notification.

Domestic termination charges are the wholesale charges payable by a telecom service provider (TSP) whose subscriber originates the call to the TSP in whose network the call terminates.

According to analysts tracking the sector, the extension of the IUC regime is a positive for Vodafone-India from a near-term perspective — in line with the government’s stance of ensuring VIL’s financial viability.

VIL’s net IUC receipts in the second quarter of this year were ₹300 crore (28 per cent of Ebitda) and Bharti’s estimated IUC receipts were ₹200 crore (7 per cent of India mobile Ebitda). But Jio’s net IUC payout was ₹650 crore (13 per cent of its Ebitda) in the second quarter this year.

So, Jio’s net IUC payouts and VIL’s net IUC receipts have both fallen by around 35 per cent in the past six months, which is a manifestation of Jio’s rising market share and improving minutes mix.

“Therefore, if TRAI had persisted with the IUC for more than a year, quite likely that Jio would have become a net IUC earner with the older telcos turning net IUC payers based on the above improvement in the minutes mix. TRAI plan of eliminating IUC from January 1, 2021 largely rules out this possibility,” an industry analyst said.

According to the industry body Cellular Operators Association of India (COAI), there should always be cost-based IUC.

“COAI has always maintained that in a CPP (Calling Party Pays) format that we follow in India, there should always be a cost- based IUC, in line with global practice. We look forward to continuing support from the government and the regulator to address the severe financial stress in the telecom sector,” Rajan S Mathews, Director-General, COAI, said.

 

Also read: TRAI decides to slash IUC rate to 6 paise from 14 paise

 

 

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