SMS revenues of Aircel and RCOM may hit during Diwali as Airtel closed network to incoming text messages

Telecom Lead India: SMS revenues of Aircel and Reliance Communications will hit during Diwali as Airtel closed its network to incoming text messages from its two rivals.


As Airtel is the largest wireless provider in India with 185.9 million mobile customers as on 30 September, 2012, SMS revenue of both Aircel and Reliance Communications depends on connectivity with Bharti Airtel.

For Reliance Communications, non-voice revenue (including SMS) contributes 20.8 percent to total revenue in second quarter of 2012-13.

SMS is an important component of non-voice revenue for Indian mobile players. According to a CII –Protiviti report, aided by better handsets and introduction of 3G services, the share of mobile value added services (MVAS) is expected to reach 31 per cent of the total revenue of the telecom sector in the next three years.

The revenue from MVAS including SMS will reach 31 percent by the year 2015. MVAS contributes nearly 11 per cent of the telecommunication revenues which excludes SMS services.

Economic Times on Monday reported that Bharti Airtel was forced to close its network after Aircel and Reliance Communications started flooding its network with free spam messages. This free SMS to Airtel networks is impacting the quality of service on network and service.

Aircel and RCOM allege that Airtel was resorting to pressure tactics just days before Diwali to force them to pay more towards SMS termination charges.

According to Aircel, Bharti Airtel has asked them to sign a bilateral interconnect agreement, which says 10 paise per SMS will be charged to a non-Airtel customer.

In November 2011, Airtel had demanded Aircel to pay 10 paise for every text message terminating on its network. Airtel also raised Rs 25 crore bill for the period from April to October 2011.

According to ET, Airtel in January sent a notice asking Aircel to pay the amount. Aircel approached the telecom tribunal (TDSAT) claiming that the dues claimed by Airtel were arbitrary, illegal, wrong, unilateral and without any basis. But, in September, the telecom tribunal ruled in favor of Airtel. Aircel has challenged the verdict in the Supreme Court.

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