According to Motilal Oswal, Reliance Jio’s decision to stop charging customers for calls to competitor’s networks from January 1, 2021, will have a negligible impact on its EBITDA or operating income as the telco already offers a higher magnitude of free minutes for such calls compared to actual usage volumes.
As per Motilal Oswal, at present Jio’s price plans provide 1,000 minutes of free off-net outgoing calls versus around 400 minutes of average off-net calls/subscriber. As a result, the incremental revenue from off-net outgoing calls would be restricted, indicating limited revenue impact.
Further, the ratings agency also noted that when Jio initially started charging IUC for outgoing calls to other networks, it was paying an estimated Rs 14.3 billion as interconnect charges or 11 per cent of (quarterly) revenue. However, in the last five quarters, it had turned a net IUC recipient as most calls were terminating on its 4G network.
