India’s three largest mobile operators slammed a decision by the Telecom Regulatory Authority of India (TRAI) to almost halve the country’s international termination rate, as they battle low tariffs and high debt levels.
TRAI mandated a 43 per cent drop on the charge on incoming international calls, reducing the fee from INR0.53 ($0.008) to INR0.30 per minute starting 1 February, a move which Bharti Airtel, Vodafone India and Idea Cellular claimed will also reduce revenue for the government, The Economic Times (ET) reported.
Despite the operators’ claim, a Fitch Ratings analyst told ET the cut would have limited impact on the trio’s earnings because a high percentage of calls coming from overseas are already made via voice apps such as Skype and WhatsApp.
TRAI said the reduction was intended to “stymie the menace of grey route international calling”, which it said was a serious threat to national security, the newspaper stated. A TRAI statement explained: “Arbitrage opportunity between [international termination charge] ITC and domestic call tariffs would become so insignificant that illegal VoIP gateway business in India would become unviable; in turn, the grey market for [international long distance] ILD incoming traffic would eventually cease to exist.”
Domestic rate cut
In October 2017, TRAI implemented a reduction in the mobile-to-mobile interconnect usage charge, or termination fee, from INR0.14 to INR0.06 as part of a broader plan to eliminate the rate completely in January 2020. At the time, analysts predicted the reduction would lead to a 4 per cent to 5 per cent fall in EBITDA for the country’s three major operators, while allowing Reliance Jio to save as much as INR40 billion a year.
The country’s largest and third largest mobile operators – Airtel and Idea – took legal action in late September against TRAI regarding the move.