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Jio voice charges may improve incumbents’ revenues: CARE

New Delhi: Reliance Jio’s move to charge voice calls at 6 paise a minute to other networks may improve the revenues for incumbents, CARE Ratings said on Friday.

“Reliance Jio’s move to recover IUC from the customers points out that the telco aims to increase its ARPU (average revenue per user) and now charge for the voice call services provided free earlier. This will also provide room to the incumbents in the industry to improve their ARPU,” CARE Ratings said.

Incumbents have been hit hard due to Jio’s free voice calls over the last three years and their ARPUs have dipped significantly, and so have their revenues and profitability. Bharti Airtel posted a Q1 loss of Rs 2,866 crore and its ARPU just increased 5.1 per cent at Rs 129 versus Rs 123 in the last quarter.

The agency said another reason that is believed to have prompted this action by Reliance Jio (to charge voice calls to other networks) is the higher percentage of outgoing Minutes of Usage (MoU) from its network to other networks (referred as outgoing off-net) compared to the percentage of incoming MoU from other networks to its network (referred as incoming off-net).

The higher off-net outgoing MoUs indicate the higher IUC paid by a particular telco to another operator for terminating a call over the other telcos› network. From the chart, it can be seen that the off-net outgoing MoUs are higher for Reliance Jio compared to the incumbents and is also higher compared to its off-net incoming MoUs.

The off-net outgoing MoUs however is reducing for Reliance Jio sequentially and the company stated that in the last three years, it has paid nearly Rs 13,500 crore as net IUC charges to the other operators from its own resources. Relince Jio cited paying Rs 13,500 crore IUC to other telcos and uncertainty of TRAI›s timeline on IUC phase out as the main reasons behind its decision to charge voice calls to other networks.

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