Oct 11, 2019, 07.34 AM IST
APIUC is a charge paid to the telco on whose network a call terminates and has been a bone of contention among the private carriers and Trai.Kolkata | Mumbai: Bharti Airtel and Vodafone Idea shares surged over 7 per cent and nearly 18 per cent, respectively intra-day on hopes of an end to the price wars that have plagued them for more than three years. The rise in stock comes a day after Reliance Jio announced it will begin charging for voice calls made to subscribers of other telcos to account for the termination charges it pays its rivals.Shares of RIL, the parent company of Reliance Jio, went up by a more modest 3.2 per cent intra-day.Analysts said the move is likely to garner net incremental quarterly revenue of Rs 1,070 crore, or roughly Rs 4,300 crore annually, for the Mukesh Ambani-led telco, and also positively impact the beleaguered telecom sector. They said if Bharti Airtel and Vodafone Idea (VIL) are able to similarly monetise IUC i.e. increase tariffs, they could generate additional annual revenue of around Rs 2,700 crore and Rs 2,350 crore, respectively. Swiss brokerage UBS said Jio’s move is “a positive development for the sector, with a potential revenue and Ebitda upside of 10-12 per cent and 35-40 per cent,” since it will result in a higher outgo from the customer.“If all operators start charging 6 paise per minute for all outgoing calls, the annual sector revenue and Ebitda can increase by Rs 15,000 crore and Rs 13,000 crore, respectively, although these numbers would trend downwards with gradually balancing (voice) traffic patterns,” UBS said. The positive earnings before interest, tax, depreciation & amortization (Ebitda) impact, it said, could be 13-15 per cent for Airtel, 55-60 per cent for VIL, and 32-36 per cent for Jio.It cautioned though that Bharti Airtel and VIL still generate more than 50 per cent of their traffic from customers on 2G and voice plans and they may not increase prices for these customers. Fiscal first quarter revenue through June for Airtel’s India mobile services was Rs 10,866.7 crore while for Vodafone Idea, it stood at Rs 11,269.9 crore. Jio's revenue was the highest of the three, at Rs 11,679 crore. Shares of Airtel ended 5 per cent higher at Rs 377.40, having touched a 52-week high intra day, while Vodafone Idea’s shares closed up 5.8 per cent at Rs 6.18, on BSE. Shares of Reliance Industries closed 2.8 per cent at Rs 1,362.40 on BSE.Analysts say the IUC recovery could also ring in a gross Arpu (average revenue per user) increase of Rs 19 per subscriber per month for Jio, but peg the net Arpu rise lower at Rs 15 per user per month as they expect a reduction in the latest telecom entrant’s volume of off-net outgoing voice traffic with the introduction of interconnect charges. Experts also expect Bharti Airtel and Vodafone Idea to similarly boost Arpu levels meaningfully if they are able to similarly monetise IUC. “If Jio gets a Rs 15 (monthly) Arpu uplift, we believe Bharti and Vodafone Idea could see a Rs 8-odd and Rs 6-odd Arpu uplift respectively-…with 282 million and 327 million customers in the June quarter, the annualised revenue/Ebitda uplift for Bharti and Voda Idea works out to Rs 2,700/Rs 2,300 crore and Rs 2,350/ 2,000 crore respectively,” brokerage Kotak said in a report.It though said the Mukesh Ambani-led telco’s move to charge customers IUC for voice calls to non-Jio mobile numbers is puzzling. “We are not sure why Jio couldn’t have waited another couple of months for the final outcome of Trai’s ongoing consultation on the issue, and in effect, the company is making an additional recharge compulsory for offnet-outgoing calls,” said the brokerage report.Further, Jio’s move “dilutes the simplicity proposition” of the company’s “pricing architecture,” said the Kotak report, noting that the additional data allowance to compensate subscribers “is immaterial from a subscriber’s perspective as most will view the compulsory IUC top-up voucher as an additional spend for no incremental value”.IUC is a charge paid to the telco on whose network a call terminates and has been a bone of contention among the private carriers and Trai. Two years ago, the telecom regulator had brought it down from 14 paise a minute to 6 paise a minute, and decided to scrap the charge from January 2020.Also Read
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