Business & Investment

Jio’s move to make free off-net local calls to ignore the impact on Ebitda: Analysts

Reliance Jio’s decision to stop billing customers for calls to rivals network According to analysts, the impact on Ebitda or “operating profit” after January 1st will be negligible. This is because market leaders already offer high free call times for such calls compared to actual usage.

Motilal Oswal said Jio’s pricing plan is Jio’s because the average off-net call / subscriber is about 400 minutes, while 1,000 minutes of free off-net outgoing calls are offered. The move has “a slight impact on Ebitda,” he said. Therefore, “it shows that the incremental revenue from off-net outgoing calls is limited and the impact on revenue is limited.”

Last week, Jio said it would stop imposing an interconnect usage fee (IUC) on all domestic voice calls by abolishing such charges from January 1, following the instructions of telecommunications regulators.

A telephone company led by Mukesh Ambani. The number of users exceeds 406 million, and the number of users exceeds 294 million. Bharti Airtel And less than 272 million of Vodafone Idea (Vi) was an increase in net revenue from IUC, 6 Paisas per minute. The charges are paid by the calling carrier to the destination carrier.

However, Motilal Oswal estimates that when Jio first began charging IUC for outbound calls to rival networks, it was paying an estimated 143 billion rupees as 11% of interconnection charges or (quarterly) revenue. However, in the last five quarters, most calls were closed on the 4G network, making us a net IUC recipient, albeit a small amount. This is due to the steady gain of customer market share.

However, Credit Suisse said the abolition of IUC should increase the operating profit of Vi, the net payer of this score, somewhat. For Sunil Mittal-led carriers, the impact of the abolition of IUC charges is “neutral to Airtel” because “the combination of on-net and off-net calls is almost balanced.”

With the abolition of IUC from January 1, the Caller Payment (CPP) system introduced in 2003 has ended. Immediately after launching the service in September 2016, Jio, who was the net payer of IUC at the time, Telecom Regulatory Authority of India (Trai) In the case of the Zero IUC regime, Airtel and Vi opposed, and Airtel and Vi were net IUC recipients. tray Initially, we decided to move to Zero IUC from January 1, 2020, but postponed that implementation for one year.

Jio’s move to make free off-net local calls to ignore the impact on Ebitda: Analysts Jio’s move to make free off-net local calls to ignore the impact on Ebitda: Analysts

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