India’s largest and third largest mobile operators – Bharti Aritel and Idea Cellular – took legal action against the country’s telecoms regulator after it decided to sharply reduce the mobile termination charge.
The operators filed a case with the Bombay High Court asking it to halt the Telecom Regulatory Authority of India’s (TRAI) interconnect rate reduction, which is due to come into effect 1 October, The Economic Times (ET) reported.
Last week TRAI announced the mobile-to-mobile interconnect usage charge will be cut from INR0.14 ($0.002) to INR0.06 from 1 October and eliminated completely from 1 January 2020.
After the reduction was announced the two mobile players, along with Vodafone India, said they planned to challenge the regulator’s decision in court.
TRAI argues the lower termination charges will benefit consumers because operators will have more retail price flexibility.
The three operators, which account for more than 60 per cent of the country’s subscribers, benefit more than other players because more calls terminate on their networks than originate from them, ET said. Reliance Jio has the most outgoing calls terminating on rivals’ networks.
According to India Ratings and Research, TRAI’s decision will lead to a 4 per cent to 5 per cent fall in EBITDA for the country’s three major operators. The research company predicts the controversial reduction will allow Jio to save as much as INR40 billion ($625 million) a year, which analysts say could lead to even lower prices by the newcomer.
Since Jio entered the market in September 2016 with nationwide 4G coverage and extended free voice and data offers, operators’ profitability plunged as they have been forced to cut data charges to retain customers.
Declining mobile revenue also led to a significant drop in the licence fees the government collected from mobile operators in the opening quarter of the year, the regulator said.