Reliance Industries stock climbed about 4 per cent on Wednesday to Rs 872 after the Telecom Regulatory Authority of India cut down the interconnect usage charge (IUC)–the fee one operator pays to the other for connecting calls between them–by over 50 per cent. Reliance Jio, the telecom venture of Reliance Industries, was launched as a disruptor by Mukesh Ambani and the new regulatory change is likely to benefit the telco. Whereas, competitors like Vodafone, Bharti Airtel and Idea Cellular took a hit.
Bharti Airtel shares fell by over six per cent and Idea Cellular’s shares dropped by around seven per cent. Jio had raised the interconnect charges issue during consultation stage with the TRAI. Telcos don’t levy the IUC from customers for incoming calls. It is the operator from whose network call originates that pays the operator in whose network the call is received.
TRAI announced its decision to cut IUC for mobile calls on Tuesday. The IUC for mobile calls was slashed from 14 paise per minute to six paise per minute. This change will come into effect from October 1, 2017. TRAI plans to gradually phase out IUC by 2020.
Bharti Airtel, in an official statement on the cut in IUC, said: “We are extremely disappointed with the latest regulation on the IUC, especially at a time when the industry is facing severe financial stress. The suggested IUC rate, which has been arrived at in a completely non-transparent fashion, benefits only one operator which enjoys a huge traffic asymmetry in its favour.”
A spokesman of Vodafone India, India’s second largest carrier, said: “We are disappointed with this decision and are now considering our options in response to it.”