NEW DELHI: Reliance Jio has accused Bharti Airtel of mispresenting facts and wrongly interpreting the newcomer’s data on purpose, to ‘create a smoke-screen to hide its ill-gotten profits’ under the present interconnect usage charge (IUC) regime, the latest instance of a war of words between the two bitter rivals who are involved in a brutal price war.
Mukesh Ambani-owned Jio has asked the Telecom Regulatory Authority of India (Trai) to take action against the No.1 telco owned by Sunil Mittal for making false representations against Jio’s analysis on Airtel’s alleged excess IUC recovery in the past five years, and influencing the ongoing consultation process on the fee in its favour.
Jio was rebutting Airtel’s September 6 letter to Trai, where the market leader had accused the new entrant of misleading the regulator through its claims that India’s top three telcos had benefited by almost Rs 1 lakh crore in the last five years from IUC not being lowered. Airtel said it had in fact made Rs 6,800-crore loss due to IUC not covering its cost. Jio wants the contentious IUC — the 14 paise a minute fee that a mobile service provider pays another to link a call to the latter’s network — to be scraped while older operators such as Airtel, Vodafone and Idea Celular want it to be doubled to cover their cost of carriage. Trai is in the process of determining what the fee should be.
“At the outset, it is submitted that Airtel’s contentions are misplaced and devoid of any fact and logic,” Jio said in a letter to Trai dated September 11. “It is obvious that this misrepresentation of facts and wrong interpretation of data has been carried out purposefully to create a smokescreen to hide its ill-gotten profits and to support its false pretense of loss under the existing IUC regime.”
Jio had alleged gains of Rs 46,958 crore made by Airtel, and Rs 1 lakh crore made cumulatively by the three incumbents, due to the IUC not being lowered in line with Trai’s representation to the Supreme Court in 2011, in an analysis presented at a regulator’s workshop on July 18. Jio noted that Trai had decided to lower IUC of 10 paise a minute in 2012 to bill and keep (BAK) regime from 2014 in which the fee is zero.
On Monday, Jio termed Airtel’s claims in its September 6 letter as ‘grossly incorrect and fallacious’, on the grounds that Airtel’s cost of 30 paise per minute on the Fully Allocated Cost (FAC) methodology, including capex, was never accepted by Trai, and should not be considered as it was artificial and inflated.
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Airtel has misrepresented facts & data, accuses Jio
“It is evident that most of the tariff plans of a dominant operator i.e. Airtel, are predatory and in blatant and contumacious contravention of the provisions contained in the Telecommunications Tariff Order, 1999 (“TTO”),” Jio said in the letter to Trai chairman RS Sharma, seeking action against Airtel. ET has seen a copy of the letter.
Jio stands to lose if IUC is raised, as it would have to pay more to incumbents, while incumbents stand to lose massively if the charge is scrapped, as they would lose a source of net revenue.
The new carrier said that Airtel deliberately ignored its pay-out towards IUC that it recovered from customers — evident from tariffs for off-net calls being at premium to on-net calls — which comes to a total of Rs 24,750 crore.
An Airtel official said that Jio’s present argument was misleading. “The calculation for payment of IUC should consider the difference between off-net incoming and off-net outgoing calls. We’re amused to see the on-net calls also being considered by Jio in their calculations. Which operator pays IUC for on-net calls?”
In its last week’s communication to Trai, Airtel had said that its actual receipts were Rs 7,795 crore, far lower than Jio’s claims, and that it was in fact making losses. The Sunil Mittal-owned telco accused Jio of attempting to distort facts to show other operators in a bad light. “We submit that the cost of work done by Airtel in terminating a call is agnostic to the originating operator… therefore it is only appropriate that the recovery be calculated on all incoming traffic handled by Airtel,” Jio argued, asking Trai to dismiss Airtel’s contention.