Airtel, Voda accuse Jio of predatory pricing

NEW DELHI: Bharti Airtel, Vodafone and Idea Cellular on Friday demanded higher call termination charges from Reliance Jio, as they accused the new operator of engaging in predatory pricing and leading the industry into losses.
The top operators met a government panel looking into the woes of the mobile players, and claimed that Jio has been providing services below cost which has led to a decline in the revenue and profitability of the industry.This, they said, will limit their ability to invest in future technologies and create new jobs.
Airtel, which has seen a severe contraction in profitability post the aggressive launch of services by Jio in September last year, said that the return on capital employed (ROCE) had dropped down to “perilously lower levels” and is “highly likely to be negative” if relief is not provided. Airtel said losses to the industry will also restrict the government’s ability to earn from the sector. Its earnings will come down by Rs 10,000 crore. “Consolidation/ reduced investments will result in loss of direct/ indirect employment.”
The companies demanded that the inter-connect usage charge (IUC) that they charge for terminating a call on their networks should be increased from the existing 14 paise per minute. They said that the current business dynamics are not supported by the IUC rate at present and the situation has worsened with a barrage of calls from Jio terminating on their networks.
“The IUC rate of 14 paise is lower than actual cost. In order to make this financially viable, it is critical that traffic between operators is symmetrical,” Airtel said, as it also sought lower duty and charges for telcos.
Idea Cellular also complained of the high cost pressure. “IUC needs to be correctly determined to prevent predatory voice-pricing environment. Aggressive tariffs in voice and data have resulted in a scenario of pricing below cost with every operator,” Idea said, seeking the fixation of a floor price for voice and data prices.
Regulator Trai has already said that it will look into the issue of a floor price through consultations and deliberations. Jio has said it does not agree with allegations of older operators. It has said that lack of investments by them in new technologies and mounting debt has been the reason behind their woes.
Vodafone India also said the IUC rates need to be increased as they are “way too low”.