Telcos’ shares tumble post TRAI notice on interconnectivity rules for 2018

Key Highlights:

• RCom stocks bled the most on BSE Sensex intraday post the announcement.
• Airtel shares dipped nearly 1%.
• TRAI said the new interconnectivity rules will come into effect from February 1.

Telecom Regulatory Authority of India (TRAI) on Tuesday instructed all telecom operators in India to follow the new interconnection agreement set by them. TRAI said the rules have to be followed on a ‘non-discriminatory’ basis within 30 days of receiving network connectivity request from another operator.

Shares of the listed telcos on the BSE Sensex dropped intraday post this announcement.

Indian telecom major, Bharti Airtel’s shares plunged 0.70% or 3.70 points to Rs 524.45 apiece on the BSE Sensex at 1230 hours.

While Idea Cellular and Reliance Communications’ stock price fell 3% and 4.94% on the 30-scrip index respectively.

As of 1318 hours, shares of operators were down 3.20% or 3.35 points to Rs 101.50 for Idea; 5.37 or 1.90 points to Rs 33.50 apiece for RCom. And Airtel’s shares were down 0.81% or 4.30 points to Rs 523.85 per share on the BSE Sensex.

TRAI has prescribed a daily penalty of up to Rs 1 lakh per service area for operators violating the new norms.

The new rules for 2018 entail crafting network connectivity agreements, provisioning of such connectivity amongst operators at initial stages, augmentation of Points of Interconnect, applicable rates or charges, disconnection of ports, and financial disincentive on interconnection issues.

These rules will come into effect from February 1, 2018.

"Through these regulations, the authority has mandated that every service provider shall, within thirty days of receipt of request from a service provider, enter into interconnection agreement on non-discriminatory basis, with such service provider," TRAI said.

Earlier, TRAI had issued a consultation paper on ‘review of regulatory framework for in interconnection’ on October 21, 2016. “The comments and counter-comments received from the stakeholders were uploaded on the TRAI’s website. Thereafter, the authority conducted an Open House Discussion (OHD) on 17.03.2017 at New Delhi. On the basis of the comments received from stakeholders, the authority has prescribed the Telecommunication Interconnection Regulations, 2018,” TRAI said.

Post the entry of Reliance Jio, the Mukesh Ambani backed company had accused incumbent operators of not providing sufficient points of interconnect. This Jio alleged lead to call failures on its network.