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.


Saudi finance minister reassures public on taxes

Updated 10 December 2019

Saudi finance minister reassures public on taxes

  • Mohammed Al-Jadaan: There will be no more fees and taxes until after the financial, economic and social impacts have been considered carefully
  • The government expects to generate about SR203 billion in taxes this year – more than 20.5 percent higher than the previous year

RIYADH: Saudi finance minister Mohammed Al-Jadaan pledged that there would be no more taxes or fees introduced in the Kingdom until the social and economic impact of such a move had been fully reviewed.

He was speaking at the 2020 Budget Meeting Sessions, organized by the Ministry of Finance and held in Riyadh on Tuesday, where a number of ministers and senior officials gathered following the publication of the budget on Monday evening.

“There will be no more fees and taxes until after the financial, economic and social impacts have been considered carefully, especially in terms of economic competitiveness,” said Al-Jadaan.

The government expects to generate about SR203 billion in taxes this year – more than 20.5 percent higher than the previous year and more than 10 percent higher than the expected budget for this year. 

Most of that increase has come from taxes on goods and services which rose substantially as a result of the improvement in economic activity over the year.

The reassurances from the minister come as the Saudi budget deficit is estimated to widen to about SR187 billion, next year, or about 6.4 percent of GDP.