Telcos Paid Rs. 11,838 Crores as IUC in 2018, Led by Vodafone: techARC

The techINSIGHT report is based on TRAI's annual report published in September this year.

Telcos Paid Rs. 11,838 Crores as IUC in 2018, Led by Vodafone: techARC

The telecom operators paid a total of Rs. 11,838 crores as IUC or interconnect user charges in 2018, led by Vodafone which paid Rs. 4,214 crores followed by Airtel at Rs. 3,411 crores and Jio at Rs. 2,809 crores, a new report by market research firm techARC said on Friday.

BSNL/MTNL paid Rs. 1,405 crore as IUC charges, said the techINSIGHT report which is based on TRAI's annual report published in September this year.

With Reliance Jio announcing 6 paise per minute charge for voice calls to rival networks, Vodafone Idea termed the announcement "an action of undue haste" and Airtel termed the Mukesh Ambani-owned company's move a forced tactics to reduce interconnection charges.

The IUC charges are paid for off-net calls to the operator on whose network a call terminates.

In 2018, Vodafone-Idea, Airtel, and Jio paid 35 percent, 29 percent and 24 percent of the total amount of Rs. 11,838 crore, respectively.

"While Jio has invested in an all-IP network to support offering free voice calls --the disruption it entered with -- incumbents are still not pure IP networks," said Faisal Kawoosa, Founder & Chief Analyst, techARC.

"VoLTE enablement is still an ongoing process for other operators, thus would require IUC to offset the infrastructure cost they bear on terminating a call," he added.

The average outgoing MoUs (minutes of usage) per annum were 312 minutes in 2018, out of which 84.01 percent of the usage terminates on another wireless network.

Currently, an operator pays a little over Rs. 100 per annum per subscriber as IUC to other operators, which is a little over Rs. 8 per month.

Also, the subscriber number range for the three main operators isn't too wide that would make one operator benefit more than the other, the findings showed.

On account of taking a hit of Rs. 13,500 crore due to network connection charges, or interconnet usage charges (IUC), Reliance Jio on Wednesday said it would charge customers 6 paise per minute for voice calls made to rival networks till IUC charges were eliminated.

It's the first time that Jio users will pay for voice calls, free since September 2016.

According to Kawoosa, there has to be a different mechanism to be worked out regarding IUC where nobody loses money and there is harmony among operators.

"One possible way could be allowing operators to charge a flat monthly fee per subscriber that they can offset the IUC against. Instead of settling interconnect charges, they would be deducting at source," said Faisal.


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Further reading: Reliance Jio, Vodafone Idea, Airtel
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