Reducing IUC to adversely impact investments in India: SingTel

Reduction in mobile call connection charges will have an adverse impact on investments and sustainability of the telecom sector in the country, Singapore's telecom major SingTel said in a letter to communications minister Manoj Sinha.

"We strongly believe that introducing a BAK (Bill and Keep) regime or reducing IUC in India is likely to have adverse consequences for investment and the long-term sustainability of India's telecommunications sector," SingTel Group Chief Executive Officer Chua Sock Koong said in a letter dated September 11.

Mobile companies currently charge 14 paise a minute for allowing a domestic call from a rival operator to terminate on their network. Trai today announced that this charge, called Interconnection Usage Charge or IUC, will be 6 paise per minute from October 1 and will be made nil from January 2020 onwards.

SingTel holds over 30 per cent stake in Bharti Airtel.

Established telecom operators have argued that every call on the network has a cost, and expenses of an incoming call on their network should be borne by the operator from whose network, the call has originated.

New entrant Reliance Jio said that cost of delivering calls on new technologies is almost negligible and incumbents continue to gain from IUC even after having recovered cost of their entire network.

Koong said that when mobile operators decide on investment levels they anticipate IUC for terminating traffic on their network.

He said reduction in IUC is highly likely to dis- incentivise mobile operators to continue to invest and innovate prospectively.

"Whilst mobile operators may seek to recover lost IUC revenues through higher retail charges to customers, in India's intensely competitive market it is unlikely that they will be able to do so," Koong said.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)