IUC will further deplete industry of investable funds: Idea Cellular

The recently announced interconnection usage charges (IUC) by the Indian regulator will further deplete the industry of investable funds and there is an urgent need for the telecom ministry`s intervention in the form of reasonable package to take the industry out of financial stress, Idea Cellular CEO and MD Himanshu Kapania said on Wednesday.

"The announced IUC will further deplete the industry of its investable funds beside creating inter-operator imbalances of high traffic assymmetries. The faultlines are already evident with the industry going through the stress," Kapania said while addressing the India Mobile Congress here.

"This will also impact the long-term financial structure of the industry. The government`s revenue collection will be hit adversely," he added.

The Telecom Regulatory Authority of India in its new regulation has more than halved IUC or mobile termination charges from 14 paise to 6 paise in a move that is perceived to adversely affect incumbent players.

"This is such a challenging scenario that we believe there is an urgent need of telecom ministry`s intervention in the form of reasonable package that can help in eliminating current financial stress in the sector," Kapania said.

He said the recent market developments have drastically altered the dynamics of the industry resulting in the sector passing through a phase of severe financial and mental stress. 

"The introduction and proliferation of bundled unlimited plans... lack of regulatory interventions has had deep impact on the industry. No industry can survive if tariffs have fallen by half in one year, but data tariff has fallen by one-tenth to one-fifteenth within a span of just one year," he added.

Kapania said the IUC move by the regulator will slowly erode 2G and 3G connections in the industry, which will adversely impact rural connectivity.

"The TRAI has pushed us to a level that only one technology survives and overall technologies will close down," he said.

Kapania said mobility sector remains one of the most taxed sectors. Multiple levies, including licence fees, spectrum charges, Goods and Services Tax, are aggregating to nearly 28-30 per cent.

"Spectrum, the key raw material for the industry, remains the most taxed," he added.