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Jio's free phone will hit telecom, erode revenues of competitors: Voda to DoT

It also called for reducing the interest rate applied for deferred spectrum payments

Press Trust of India  |  New Delhi 

A man casts a silhouette onto an electronic screen displaying a Vodafone logo, in Mumbai. Photo: Reuters
A man casts a silhouette onto an electronic screen displaying a Vodafone logo, in Mumbai. Photo: Reuters

The country's second largest player expects Jio's 'effective free phone' with unlimited calling to erode operators' revenues which are already under pressure and sought reduction in various levies imposed by the government as a breather to the industry.

"...The new operator continues to aggressively under- price its services, including announcing launch of 'Effective Zero Price Feature Phone' with unlimited voice.

"This is likely to cause further erosion in for existing operators," the company in a letter to the Commission Member (Finance) Anuradha Mitra.

Chairman and MD recently launched JioPhone, a 4G feature phone at a one-time fully refundable deposit of Rs 1,500 per unit. Jio has slated to beta-test the low-cost phone from August 15. The booking will start from September 24 online as well as through Retail and Jio stores.

said there is a continuous decline in its from services and it has recorded further decline of 3.41 per cent in the quarter ended June 2017.

It also called for reducing the interest rate applied for deferred spectrum payments.

"...A reduction in the interest rate applied for deferred spectrum payments is necessary to reduce a burden on operators. Hence, we have requested a reduction from 10 per cent to G Sec rate of 6.25 per cent-6.5 per cent on deferred payment," the letter said.

said that share with the government imposes huge burden on operators even though companies purchase spectrum at market price.

The company requested the to consider recommendation of the Regulatory Authority of India for reducing Universal Service Obligation Fund from 5 per cent to 3 per cent as private operators have already rolled out services in rural areas and current call termination rates are very low.

"...Despite having rolled out in rural areas, we still have to pay USO and the mobile termination rates are also below cost which adversely impact us since majority of the calls in the rural areas are incoming," the letter said.

At present, a operator charges 14 paise for every incoming call that it gets from network of other operators.

"Therefore, we earnestly request kind consideration and early decision on reduction in the USO levy from 5 per cent to 3 per cent and reduction of interest charges along with rescheduling the payment period, which has been tabled before and IMG (inter-ministerial group)," said.

As per official data, revenues of operators from services dipped by about 15 per cent to Rs 40,831 crore in the January-March quarter this year compared to Rs 48,379 crore in the same period of last year.

The government has formed an IMG which is expected to submit its recommendation very soon to address financial woes of the sector.

First Published: Wed, August 16 2017. 08:50 IST