Reliance Jio to Lose Out on Potential Revenue Because of IUC Scrapping

Going by the voice minutes, the Mukesh Ambani led telecom operator, Reliance Jio Infocomm, has soared ahead of other telcos Bharti Airtel and Vodafone Idea, thus amassing the most share. As per a new ET Telecom report, the Reliance Jio now has a share of 36% voice minutes, as compared to Bharti Airtel which has 33.5% and Vodafone Idea which has 30.7% share. This re-ranking of the telecom operators means that Reliance Jio will lose a potential revenue opportunity which comes as a result of the scrapping of interconnect usage charges (IUC). This benefit would start coming to Reliance Jio in January 2020. To recall, while the sector regulator was deciding on the matter, Reliance Jio had backed the decision of the regulator while the other rival telcos were against it.

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Change in IUC Regulations Since 2017

As per the opinion of the analysts, Reliance Jio has already become the top telecom operator by revenue market share (RMS), and it is on the course of becoming the revenue net gainer with the current IUC regulations. It is also the case that most calls will terminate on the Jio 4G network and this would be because of Jio’s leadership in the voice minutes and the continuous increase in market share.

To recall, back in 2017, the Telecom Regulatory Authority of India (Trai) had reduced the IUC by 57% down to 6 paise. But, now the Trai is scraping these rules in 2020. This means that Reliance Jio would not have anything to gain from this as Airtel and Vodafone Idea would not have to pay interconnect usage charges. If you don’t know, IUC is paid by the call originating telco to the destination operator.