The secret to Jio's success lies in its books, claims Airtel

Reliance Jio Infocomm has rejected rival Bharti Airtel’s allegation that the former’s 4G network cost is low due to different accounting practices, saying the two issues are not connected and cost differential is because of the technology the latest telecom entrant has deployed.“Accounting standards have nothing to do with the cost of carrying a voice call…Jio follows Indian accounting standards. It’s a blatant lie to say it does its accounting in any different way,” a senior Jio executive told ET.The Sunil Mittal-led telco has alleged that Jio’s lower network cost claims stem from its completely different accounting practices, unlike established standards followed by telcos worldwide, including Airtel.A senior Airtel executive told ET there are “massive differences in the way Jio does its accounting,” unlike other operators, who follow a simple standard that uses established practices to decide what cost is capitalised in the balance sheet and what’s reflected in the P&L account.But the Jio executive said its lower 4G network cost was due to the Voice over LTE (VoLTE) technology it has deployed across India. It has been “demonstrated to all authorities that cost of carrying a voice call on an IP network is close to nil at 0.05 paise a minute,” and by not being able to upgrade to the IP framework, incumbent operators “continue to exploit their 2G/3G customers” by charging them as much as Rs 1.50 a minute for voice calls.An Airtel spokesperson declined comment for this report.Airtel and Vodafone Idea have 18% and 5% of their voice traffic on VoLTE (read: IP network), respectively, while Jio has 100%, as per Telecom Regulatory Authority of India data. Trai cited this data as a major reason for the still existing voice traffic imbalance between operators, which triggered its move to float a consultation paper on whether to defer a zero-interconnect usage charge (IUC) regime slated to take effect from January 2020.IUC is paid by the call-originating telco to the destination operator for carrying its voice traffic. Trai expects a balanced voice traffic flow to eliminate the need for an IUC.Older telcos Airtel and Vodafone Idea, and the Mukesh Ambani-owned Jio have blamed the other for voice traffic imbalance, and for allegedly ‘gaming’ the IUC system to direct more incoming traffic on to their own networks to gain revenue. Currently, Airtel and Vodafone Idea are net IUC revenue gainers, while Jio pays out on a net basis, due to the voice traffic flow patterns.But the voice traffic gap is narrowing between the two as Jio gains subscriber and minute market share at the cost of its rivals. Jio is now the largest telco by both these parameters.As per Trai data, traffic imbalance in terms of absolute minutes between Jio and others has reduced from a peak of approximately 60 billion minutes in December 2017 to 40 billion in June.

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