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India regulator orders sharp cut in mobile interconnection fees

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India regulator orders sharp cut in mobile interconnection fees

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MUMBAI (Reuters) – India’s telecoms regulator has more than halved a fee mobile operators pay each other for calls from one network to another in a move that could hurt leading operators including Bharti Airtel <BRTI.NS> and Vodafone’s <VOD.L> Indian business. Operators in India do not charge customers for incoming calls, but the carrier from whose network a call originates pays the network that receives the call. The top players with the highest number of subscribers tend to gain from the fees. Vodafone India, the market’s second-biggest carrier, described the move as “retrograde” and said it could affect investment in network coverage in rural areas. “We are disappointed with this decision and are now considering our options,” Vodafone India said in a statement. The Telecom Regulatory Authority of India (TRAI) late on Tuesday said that interconnect usage charges (IUC) for mobile calls will be cut to 0.06 rupees (0.0007 pounds) a minute from 0.14 rupees, effective from Oct. 1. It then plans to abolish the fee entirely from the start of 2020. Market newcomer Reliance Jio Infocomm, which has shaken up the sector by offering free calls and cut-price data, is likely to gain from the move. During the consultation process, Jio had questioned the interconnect charges, saying that incumbents had already recovered their investments. Jio, Bharti Airtel and No.3 operator Idea Cellular <IDEA.NS> did not immediately respond to requests for comment. The Cellular Operators Association of India, which counts Bharti, Vodafone and Idea among its members, said that incumbent carriers would take a severe hit from the reduction to interconnect fees. “It’s going to exacerbate the financial condition of the industry,” said the association’s Director General, Rajan Mathews, referring to falling profits and high debt resulting from costly airwave auctions and a brutal price war. That backdrop has already kickstarted sector consolidation, with Vodafone India and Idea having agreed a merger, while smaller carriers Reliance Communications <RLCM.NS> and Aircel are combining their mobile operations.

(Reporting by Sankalp Phartiyal; Editing by Devidutta Tripathy and David Goodman)
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