(LiveMint)
There is no such thing as a free lunch, unless of course someone else is picking up the tab. While Reliance Jio Infocomm Ltd’s services were entirely free for its customers until March 2017, they came at a great cost to the company. Leave alone recovering the massive investment in the telecom project, operating expenses themselves are enormous and could be way above revenues that Reliance Jio will make based on current tariff plans.
The Telecom Regulatory Authority of India’s (Trai’s) quarterly financial report provides a glimpse of how much Reliance Jio might have spent on just interconnection charges in the March quarter. Interconnection charges of 14 paise per minute are payable by a telecom operators whose subscriber makes a call to the telco whose subscriber receives the call. Based on Trai’s data for the March quarter, analysts at Kotak Institutional Equities estimate that Reliance Jio may have paid other services providers as much as Rs1,500 crore for calls terminating in their networks (caveats/assumptions below). For perspective, Reliance Communications Ltd, with a somewhat similar subscriber base, reported gross revenues of Rs1,653.7 crore for the March quarter to Trai, which is nearly as much as what Reliance Jio spent on only one of its many expense items.
