Trai IUC rethink gives a ray of hope for Vodafone Idea; short-term hit for Jio

Mumbai: For Vodafone Idea Ltd’s investors, the Telecom Regulatory Authority of India’s (Trai) rethink on the termination of interconnect usage charges (IUC), effective January 2020, has come as a sigh of relief. The stock surged 12% in early deals on Thursday. Given the many worries about the company’s cash burn and depleting revenue market share, it isn’t surprising that this development is being cheered. Of course, Vodafone Idea shares still trade at only Rs5.45 a piece, which shows that investors’ hopes overall remain low.

Analysts at Jefferies India Pvt. Ltd estimate that 30% of Vodafone Idea’s operating earnings are due to net IUC earnings. So abolition of these charges beginning next year would have dealt severe blow to the company.