Jio and Airtel’s international usages charges: The Reliance Jio Infocomm Ltd books a Bharti Airtel Ltd has made an excess recovery of the Rs 46,958 crore. The telecom regulator did not do away with the IUC (international usages charges).

The numbers behind Jio and Airtel’s international usages charges (IUC) spat:

The Reliance Jio charges are the references to an affidavit submitted by the Telecom Regulatory Authority of India to the Supreme Court in October 2011. They talked about the phase out of the IUC by the year 2014. Idea Cellular Ltd and Vodafone India Ltd together collect another Rs 57,476 crore on account of the anomaly.

The Airtel has questioned the Reliance Jio’s calculations in a letter to Trai “Even if you were to suspect the claims made by the Reliance Jio to be correct, the current value of the surplus recovery would be a Rs 7443 course only not the Rs 46958 corporate. The Jio claims it in its presentation”.

Bharti Airtel’s estimate of surplus recovery:

international usages charges
international usages charges

The telecom companies enter at numbers that are poles apart? Reliance Jio latest missive to the regulator throws light on the matter.

Airtel has multiplied the difference between the proposed rates in the Trai and prevailing IUC rates. The net incoming calls it receives from other telecom services providers. The current value of these cash flows in the last five years works out to Rs 7,443 crore.

Read more: Airtel launches the Airtel VoLTE Services

Reliance Jio says that using the net incoming calls to calculate the surplus recovery skews in the picture. Reliance says Airtel recovers the IUC payables by charging to the higher tariffs for outgoing calls that land outside the network. It compared the rates apply for the calls within the network. It does not make sense to the subtract Airtel’s IUC payments from the receipts.

Reliance Jio’s estimate of Airtel’s surplus recovery:

Reliance Jio's estimate of Airtel's surplus recovery
Reliance Jio’s estimate of Airtel’s surplus recovery

Using this approach the excess recovery networks out to the Rs 30,650 crore. The higher number because it includes the on-net incoming calls in Jio calculations. It is strange because; Airtel or any telecom operator for that matter does not get the IUC for the incoming calls that originate from its network. The Reliance Jio decision to include “the amount of the excess recovery to  Rs 46,958 crore”.

It’s everything to do with the IUC discussion all of this contentious. The Airtel IUC should ideally rise to the 30 paise from the current 14 paise. In their books, the excess recovery, there is an under recovery of the Rs 6,829 crore on the amount of the sub optimal IUC rate.

In the above discussion is one dimensional and doesn’t take into amount intricacies such as the two-sided nature of the telecom market. The Trai releases the IUC recommendations; it can demonstrate. It has been able to cut out the noise and framed its policy based on sound analysis.

LEAVE A REPLY

Please enter your comment!
Please enter your name here