TRAI Scrapping IUC Charges Might Help Vodafone-Idea And Airtel: Report

TRAI has come up with many measures like scrapping IUC charges for one more year and fix prices for both data and voice, to improve the financial condition of the telecom industry. But now, it has been reported that this move by the regulator will help incumbents like Vodafone-Idea and Bharti Airtel.

Currently, the telcos are facing a major financial crisis and they are under a debt of Rs. 7 lakh crore. On top of that, the industry has been hit by the Supreme Court decision (October 24) on the AGR issue where Vodafone- Idea has to pay Rs. 53,039 crore and Airtel have to pay Rs. 32, 586 crore to the government within three months.

"Postponing of the zero-IUC deadline would offer immediate relief to Vodafone Idea and Airtel by way of improved cash flows, in turn, boosting their operating income levels in FY21. This, especially since Trai's regulation allows them to continue charging for voice services, a revenue stream that would have disappeared if the regulator had stuck to the original January 1, 2020, interconnect charges phase-out deadline," Analysts was quoted by the Economic Times.

The report states that fixing floor pricing will help Vodafone- Idea to get into bankruptcy. And there are chances that the company will increase tariffs further. "A floor price for voice/data is overdue, given the stress in the telecom industry, and would largely be on the lines of the concept of a reasonable rate of return allowed in the past to private power companies," Hemant Joshi, partner at Deloitte Haskins & Sells, was quoted by the newspaper.

Furthermore, TRAI has invited all stakeholder's views by January 17, 2020, and counter comments by January 31, 2020. Doing away with the IUC means there will be no free calls to other networks and callers have to 6 paise per minute. This also means that there will be more outgoing calls than incoming calls.