IUC: Advantage Rjio

In the bitterly fought battle on Interconnection Usage Charge (IUC) among telecom operators, newbie Reliance Jio scored a win while incumbents Bharti Airtel and Idea faced a setback last week. Telecom regulator TRAI directed reduction of IUC from 14 paise per minute to 6 paise per minute and further to zero by January 2020.

IUC is payable by a service provider, whose subscriber originates the call, to the service provider in whose network the call terminates. This is meant to cover network usage costs for the operators. For older players with strong market presence, the cut could put pressure on financials, possibly to the extent of ₹7,000 crore in revenue. Reliance Jio could, however, save ₹5,000-6,000 crore.

Last Wednesday, the shares of Bharti Airtel and Idea took a knock before steadying somewhat; the Reliance Industries stock, on the other hand, touched an all-time high of ₹872.

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