Exclusive: COAI says IUC cut will hit Telco’s revenue by almost Rs 6000 crore

The telecom sector which is already under stress and sitting on a huge debt ever since Reliance Jio made its entry into the Indian market, is now going to lose Rs. 5,000 to Rs. 6,000 crore of revenue in the current fiscal if TRAI's interconnect usage charges (IUC) come into play.

"We think it's disastrous for the industry in its present situation, so we don't believe that it should come down," Rajan S Mathews, Director General, Cellular Operators Association of India (COAI) told Gizbot in an interview.

He further added, "If this goes into the play the industry will lose about Rs. 5,000 - Rs. 6,000 crore of revenue and if you look at the bottom line then most of the major operators will feel the impact of about 6 to 10 percent."

Mathews also said, "We really don't think that it is advantageous for the industry may be its good for one or two operators. And most of the members had indicated that they would probably move to court."

The IUC rates have been the biggest issue between incumbent telcos and Reliance Jio.

Incumbents have also demanded to increase the IUC rates to 28- 35 paise per minute from the present level of 14 paise a minute. The prevailing IUC Regulation was notified on February 23, 2015, and came into effect on March 1, 2015.

Besides, telcos such as Bharti Airtel and Vodafone have also said that telecom infrastructure in rural areas largely depends on revenue from incoming calls and lowering or removal of such charges will hamper services.

To recall, the Telecom Regulatory Authority of India (TRAI) has slashed interconnection usage charges to 6 paise per minute from 14 paise minute.

TRAI said that for Mobile to Mobile, termination charge has been reduced from 14 paisa per minute to 6 paise per minute effective October 1. For other types of calls (such as wireline to mobile, wire-line to wireline and wire-line to mobile) the termination charge would continue to remain zero. From 1st January 2020 onwards the termination charge for all types of domestic calls shall be zero."

However, Trai has assured that there would be no call termination charges applicable from 1 January 2020.