Latest Updates:
Home » Latest Update » Domestic Telcos to be Hit as Trai Cuts ITC to 30paise/min

Domestic Telcos to be Hit as Trai Cuts ITC to 30paise/min

By / January 13, 2018 / / 0 Comments

The telecom regulator has slashed international termination charge (ITC) – paid by international operators to local networks that receive calls – by 43%, a move that will hurt revenue of India`s older operators reeling from ongoing brutal price wars.

Incumbents Bharti Airtel, Vodafone India and Idea Cellular have asked the Telecom Regulatory Authority of India (Trai) to withdraw its decision on grounds that reduction to 30 paise from the earlier 53 paise a minute would lead to massive loss of revenue to the exchequer, though Reliance Jio did not back the plea.

“Authority has decided to revise the termination charge for international incoming call to wireline and wireless from ?0.53 per minute to ?0.30 per minute,” said Trai on Friday, adding that its aim was to stymie the ‘menace’ of grey route of international calling which it said also posed a ‘serious threat’ to national security.

It argued that this was a more important regulatory priority than facilitating the shift of the international incoming traffic from over-the-top (OTT) – apps like Whatsapp, Viber and Skype used to make voice and video calls over the internet – to carrier route.

“Arbitrage opportunity between ITC and domestic call tariffs would become so insignificant that illegal voice over internet protocol (VoIP) gateway business in India would become unviable; in turn, the grey market for ILD (international calls) incoming traffic would eventually cease to exist,” Trai explained further.

The new rate comes into effect from February 1. Trai will monitor the trends and patterns of incoming international calls and may review the rate from time to time, but did not give a roadmap.

Trai added that the move would not only plug the leakages in the revenue accruable to the country and Indian telecom players but would also ensure that India continues to earn foreign exchange from the international incoming voice traffic business.

“It is against national interest, as the country will lose precious foreign exchange, due to a sharp reduction of 43% in ITC by Trai,” said Rajan Mathews, director general, Cellular Operators Association of India (COAI).

One of the executives belonging to older carriers said, industry was would have benefitted from incremental forex of ?6,000 crore had the ITC been increased to ?1, and an additional forex of around ?10,721crore had the ITR been eventually increased to ?3.5 per minute.

“Incumbent revenue from international calls terminating here will be directly and proportionally impacted by the 43% reduction in ITR,” said Mritunjay Kapur, head of telecom, media and technology at KPMG India.

While an analyst said reduction in India’s ITR would improve margins for foreign companies that carry calls to Indian gateways, Prashant Singhal, TMT head for emerging markets at EY, said outgoing calls will continue to be expensive, which means Indian consumers won’t benefit.

Leave a reply