The Telecom Regulatory Authority of India (Trai) is set to cut the interconnection usage charge (IUC) levied by telecom companies, according to a 13 August report in The Times of India. Trai chairman R.S. Sharma has said IUC recommendations will be framed by the end of the month, suggesting a final decision is yet to be taken.
But if IUC is indeed cut, it will be a double whammy of sorts for large incumbents.
First, the compensation they earn for terminating calls from competing networks will dwindle. More importantly, the move will result in huge savings for new entrant Reliance Jio Infocomm Ltd, which may well use the opportunity to step up its pricing aggression.
The upshot: companies such as Idea Cellular Ltd will be dragged deeper into the red, while Bharti Airtel Ltd’s India wireless business, too, could start running pre-tax losses.
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