An employee wearing a branded polo shirt assists a customer inside a Vodafone Group Plc retail store in London, U.K. (Photographer: Chris Ratcliffe/Bloomberg)

Vodafone CEO Flags Concerns Over Further Cut In Mobile Termination Charges

Vittorio Colao, chief executive officer of Vodafone Group Plc, has written to Telecom Minister Manoj Sinha seeking a cut in interest rate on deferred spectrum payment, and raising concerns over a reduction in mobile termination charges.

Following the crunch in telecom sector, the CEO is looking forward to the Inter Ministerial Group meeting for certain reforms.

He stated in the letter that his hopes are pinned upon the IMG recommending a reduction in interest rates for deferred spectrum payment to 6.25 percent.

Furthermore, calling the reports on reduction in mobile termination charges (MTC) by the Telecom and Regulatory Authority of India (TRAI) as alarming, Colao said it will harm the company’s vast investment in rural and urban spaces.

MTC as the name suggest are the charges which one telecommunications operator charges to another for terminating calls on its network.

He maintained that the existing 14 paise rate is “below cost”, and further curtail would risk large scale site shut-down of existing unprofitable sites in rural India, impacting the population coverage of mobile telephony.

Taking a dig at the new but highly celebrated entrant, Reliance Jio Infocomm Ltd., Colao rubbished the operator’s claim of having cost advantage to existing players, due to its only 4G service.

He added that the TRAI’s industry workshop concluded that Reliance Jio’s continuous growth has merged from an “implausible level of paid traffic.”

It is undesirable for a critical core industry like telecom to be regulated based on the ambition of a new operator with no history of financial sustenance.
Vittorio Colao, Chief Executive Officer, Vodafone Group

He concluded by stating that further MTC cut would be unhealthy for an already difficult sector, and would also be a setback to the government’s rural coverage objective.

He reiterated his commitment to the government’s vision of Digital India.