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Reliance Jio trying to transfer its costs to others, says Airtel amid IUC row

LiveMint logoLiveMint 20-07-2017 Amrit Raj

New Delhi: Bharti Airtel Ltd, India’s largest telecom operator, on Thursday accused rival Reliance Jio Infocomm Ltd of trying to transfer its own costs to the rest of the industry and a “sinister design” to create a monopoly through predatory pricing.

Reliance Jio is seeking an end to call termination charges merely to transfer its own costs, currently Rs20,000 crore a year, to other operators, Airtel said in a statement, adding these costs will only increase in the future.

Such cost transfer will allow Reliance Jio “to use its muscle power and price its services in a predatory manner to kill the rest of the industry and create a monopoly”, the company said.

For every phone call, the telco that originates the call pays 14 paise to the one which receives the call, called interconnection user charges (IUC). On a net basis, larger telcos with more users and bigger networks earn more from IUC, while newer and smaller ones find it a burden. At a workshop held by sector regulator Telecom Regulatory Authority of India (Trai) on Tuesday, Jio pressed for a so-called Bill-and-Keep model under which IUC would be effectively scrapped, while its three large rivals—Bharti Airtel, Idea Cellular Ltd and Vodafone India—demanded that it be raised to 30 paise.

“In effect, Reliance Jio aims to build its business by getting a free ride on the highways built by Airtel and other operators. Their proposal to move to Bill and Keep will further burden other operators and make them weak. At the same time, it allows Reliance Jio to continue with its strategy of predatory pricing and ultimately throttle all competition. This is the sinister design of Jio. The question to ask is does India want a monopoly situation in telecom?” Ravi Gandhi, chief regulatory officer, Bharti Airtel said in the statement.

Separately, Gandhi told Mint that Jio is terminating 12 billion minutes a month on Airtel’s network and this results in Rs250 crore in loss every month.

He added that with the tsunami of calls coming from Jio, Airtel loses 21 paisa for every minute that is carried on its network. This has resulted in a loss of Rs550 crore per quarter for Airtel alone, it added.

An email sent to Jio seeking comments on Thursday remained unanswered till press time.

“Bill-and-Keep (BAK) model is applied in a trade where economic value of the trade is same, which is not applicable in this case. Therefore, IUC should be increased to the actual cost and BAK model should be rejected,” Gandhi said over the phone.

The Airtel statement termed allegations made by Jio regarding Airtel earning excess revenue from these charges as not only false but laughable.

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