New Delhi: The Telecom Regulatory Authority of India (Trai) on Friday slashed the international call termination charge from 53 paise a minute to 30 paise a minute, dealing a blow to telecom operators such as Bharti Airtel Ltd, Idea Cellular Ltd and Vodafone India Ltd.

Telecom firms had sought a hike in the rate to Rs3.5 per minute.

The termination charge is payable by an international long distance operator (ILDO) to the Indian telecom operator on whose network an overseas call terminates.

The new rate takes effect on 1 February. The cut follows a steep reduction of the domestic interconnection usage charge—paid by one operator to another for landing calls on the latter’s network—to 6 paise a minute from 14 paise, effective 1 October.

“While one cannot immediately estimate the size of the impact on most telecom operators, it will definitely be negative and is likely to impact earnings," an analyst said.

The Cellular Operators’ Association of India (COAI), a lobby group, had sought a hike in the international call termination charge to Rs3.5 a minute. Reliance Jio Infocomm Ltd had pushed for a cut to 6 paise.

“COAI is of the view that the reduction in international termination charge (ITC) is against national interest, as the country will lose precious foreign exchange due to a sharp reduction of 43% in ITC by Trai, from the existing 53 paise to 30 paise," Rajan S. Mathews, director general of the lobby group, said in a statement.

The loss to telecom service providers on account of the reduced ITC received by them from foreign carriers for incoming international calls is expected to be approximately Rs2,000 crore annually, and this will also lead to a loss in revenue to the exchequer, from both licence fees and GST, Mathews said, adding that Trai’s move is a body blow to an already stressed industry and the cut will only benefit foreign carriers at the expense of the domestic industry.

COAI also conceded that its member Jio has a divergent view on this issue.

Emails sent to Airtel, Reliance Jio, Idea and Vodafone hadn’t been answered as of press time.

Some telecom firms had argued that an increase in the international call termination charge would lead to higher foreign exchange earnings that they could use to provide more affordable services to Indian customers. They also said the increase would lead to the exchequer earning higher revenue in the form of licence fees and taxes.

Critics said an increase in the international termination charge could prompt migration of traffic to over-the-top services such as WhatsApp, which would not only dent the earnings of Indian telecom operators and ILDOs, but also pose potential security risks.

The telecom industry earns about Rs4,500 crore per year of foreign exchange for terminating international calls to India, operators told the regulator during consultations. “While, prima facie, an increase in ITC appears to be beneficial for Indian access service providers in the short run, it requires to be seen as to whether such an increase would indeed be advantageous for the Indian telecom sector in the medium-to-long-run in view of the fact that the ILD incoming traffic in India has shown a declining trend in financial year 2016-17," Trai said.

The number of ILD incoming voice minutes had come down to 87.4 billion minutes in 2016-17 from 92.4 billion minutes in 2015-16, Trai said.

In 2015, Trai raised the termination charge for international incoming calls to 53 paise per minute from 40 paise per minute. In 2009, too, the charge had been raised to 40 paise per minute from 30 paise.