Vodafone challenges new interconnect rate structure in Supreme Court

NEW DELHI:Vodafone India has challenged in the Supreme Court the new tariff structure, or parts of it, notified by the regulator recently which slashed by 30% the amount that mobile operators pay to each other for calls made from one network to another and scrapped similar charges for wireline operators.

A counsel for Vodafone had wanted an urgent hearing from the apex court which is likely to hear the case on Friday.

Under the new tariff regime, a mobile phone operator now needs to pay 14 paise a minute for each call terminating on a rival’s network, compared with 20 paise earlier, the Telecom Regulatory Authority of India said in an order on Monday.

Calls made from landlines to a landline or a mobile phone won’t include any such interconnection usage charge (IUC), which was 20 paise earlier.

IUC makes up about 20% of mobile call tariff that a user pays.

Bharti Airtel, Vodafone India and Idea Cellular, which hold over 70% of the market share, have the maximum calls emanating and ending on their networks, and thus are likely to have a direct impact on their financials.

The rest is made up of smaller operators such as Uninor, Aircel, Tata Teleservices whose call rates are typically much lower than the big three.

The Telecom Regulatory Authority of India also increased interconnect charges for international calls terminating on a local network to 53 paise from 40 paise earlier. These are charges foreign operators need to pay to local players.

“The changes made to termination charges have the overall effect of transferring EBITDA from global telecom operators to smaller operators in India (and possibly Indian subscribers), while restricting the impact on the larger operators in India to a minor negative number,” Credit Suisse said in a report.