Vodafone India is challenging the country’s new tariff structure in the country’s Supreme Court, under which the mobile call termination rate has been reduced by 30 per while the interconnection usage fee for all types of calls made from fixed-line phones has been scrapped.
Vodafone wants an early hearing from the court, which may take place as soon as Friday.
Mobile call termination, which was was previously INR 0.20 ($0.0032), has now been set at INR 0.14 by the Telecom Regulatory Authority India (TRAI), while the INR0 0.20 fee for calls from fixed-line phones to a mobile or fixed-line number has been dropped completely.
Interconnection usage charges account for about 20 per cent of mobile call tariffs that users pay.
The three largest operators, Vodafone are Bharti Airtel and Idea Cellular, together hold around 70 per cent of market share while smaller operators include Aircel and Tata Teleservices, have around 7-8 per cent market share each.
TRAI said it proposed to drop the fixed-line termination rate to zero to promote investment in fixed networks, in the hope of boosting the country’s high-speed internet take-up.
According to a report by investment bank Credit Suisse, these changes will “have the overall effect of transferring EBITDA from global telecom operators to smaller operators in India (and possibly Indian subscribers), while restricting the impact on the larger operators in India to a minor negative number.”
However, Hemant Joshi, partner at Deloitte Haskins & Sells, said that “since the tariffs in India are the lowest in the world and in view of high spectrum costs and taxes faced by the telecom operators, they may not be able to pass on the benefit of reduced termination charges to the consumer.”