India slashes mobile interconnection fee

India’s top telecoms players with the highest number of subscribers tend to gain from the fees. (Reuters)
Updated 20 September 2017

India slashes mobile interconnection fee

MUMBAI: India’s telecom regulator more than halved a fee mobile carriers pay for calls made from one network to another, dragging down shares of bigger operators such as market leader Bharti Airtel that are likely to be hit hard by the move.
Operators in India do not charge users for incoming calls, but the carrier from whose network a call originates pays a fee to the network that receives the call. The top players with the highest number of subscribers tend to gain from the fees.
The Telecom Regulatory Authority of India (TRAI) late on Tuesday said interconnect usage charges (IUC) for mobile calls will be cut to 0.06 rupees a minute from 0.14 rupees, effective October 1. The fee will be scrapped from 2020.
Morgan Stanley estimated the fee cut could lead to an about 40 percent plunge in Bharti Airtel’s annual profit, adding that Reliance Jio Infocomm would be the key beneficiary of the move.
Reliance Jio, backed by India’s richest man Mukesh Ambani, has disrupted the highly competitive telecoms sector with free voice calls and cut-price data. Being a new player, it has relatively more calls made from its network.
Jio had questioned the interconnect charges, saying that rival operators had already recovered their investments.
Bharti Airtel and Vodafone’s India unit, the market’s second-biggest carrier, said they were disappointed by the fee cut. Vodafone said it was considering its options, warning it could hurt investments on covering rural areas.
Shares in Bharti Airtel fell as much as 6 percent, while third-ranked Idea Cellular shed up to 7 percent.
Reliance Industries, the parent of Jio, rose 4 percent in intraday trade versus the wider Mumbai market that was up a slight 0.1 percent.
Jio and Idea did not respond to requests for comment.
The Cellular Operators Association of India, which counts Bharti, Vodafone and Idea among its members, said 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.
The sector is already seeing a consolidation, with Vodafone India and Idea having agreed a merger, while smaller carriers Reliance Communications and Aircel are combining their mobile operations.


US President Trump does not want to do business with China’s Huawei

Updated 44 sec ago

US President Trump does not want to do business with China’s Huawei

  • US Commerce Department expected to extend a reprieve that permits Huawei to buy supplies from US companies to service its customers

WASHINGTON: US President Donald Trump on Sunday said he did not want the United States to do business with China’s Huawei even as the administration weighs whether to extend a grace period for the company.
Reuters and other media outlets reported on Friday that the US Commerce Department is expected to extend a reprieve given to Huawei Technologies Co. Ltd. that permits the Chinese firm to buy supplies from US companies so that it can service existing customers.
The “temporary general license” will be extended for Huawei for 90 days, Reuters reported, citing two sources familiar with the situation.
On Sunday, Trump told reporters before boarding Air Force One in New Jersey that he did not want to do business with Huawei for national security reasons.
He said there were small parts of Huawei’s business that could be exempted from a broader ban, but that it would be “very complicated.” He did not say whether his administration would extend the “temporary general license.”
Speaking earlier on Sunday, National Economic Council director Larry Kudlow said the Commerce department would extend the Huawei licensing process for three months as a gesture of “good faith” amid broader trade negotiations with China.
“We’re giving a break to our own companies for three months,” Kudlow said on NBC’s “Meet the Press.”