Last week, Reliance Jio (RJio) said it would charge 6 paise per minute on off-net calls. The move, analysts believe, would be viewed as sentimentally positive for the telecom companies.
Brokerage Motilal Oswal Financial Services (MOFSL) remains positive on the company due to its potential free cash flow or FCF break-even position in FY20. The move, it says, could also offer big sentimental positive as it indicates positive trends and re-rate in the telecom stocks given the credence toward the high growth expectation in FY21 and further.
“Reliance Jio’s move to recover Interconnection Usage Charges (IUC) from the customers point out that the telco aims to increase its average revenue per user (ARPU) and now charge for the voice call services provided free earlier. This will also provide room to the incumbents in the industry to improve their ARPU,” CARE Ratings said in a telecom sector update.
While Jio is of the opinion that IUC be withdrawn, incumbents want IUC to remain. With this move, it appears that industry is expecting the IUC regime to continue post January 2020. However, it remains to be seen what decision TRAI will take considering market developments in the telecom industry, it added.