Breaking: Telenor Exits ICH

As expected, Telenor today announced publicly that it has exited ICH or International Clearing House from January 25th, 2014, after which ICH – by definition – has collapsed altogether.

Telenor said that Telenor LDI Communications (Pvt.) Ltd (TLC), a subsidiary of Telenor Pakistan has made its exit from the International Clearing House (ICH) due to heavy losses to Telenor as an enterprise.

International Clearing House, implemented under a policy issued by MoIT, included 14 LDI operators. However, during the while, mobile companies – Telenor and Mobilink specifically – were not contented due to share they were getting out of consolidated international incoming traffic’s revenues.

At the time of implementation of ICH Mobile Termination Rate of Rs. 1.20 for international incoming (MTRI) was proposed for mobile operators, however, it was never implemented.

As a result, Telenor showed its concerns last month when ICH was to be reviewed by Ministry.

Telenor said it faced financial losses of more than PKR 2.2 billion since the establishment of ICH and upward revision of Total Accounting Rate/Access Promotion Charge.

Muhammad Aslam Hayat, Vice President Corporate Affairs Telenor Pakistan said on the development, “Elimination of grey traffic is a focus area for us. We have worked closely with the regulator in reducing grey traffic that is detrimental to telecom operators and the economy alike. Unfortunately, it has been observed that the grey traffic has increased considerably since the formation of ICH and upward revision of Total Accounting Rate/ Access Promotion Charge. This has also had an adverse effect on our business thus causing substantial revenue losses that are affecting our ability to run as a stable business entity. Staying in ICH in these circumstances was no more an option. However we are still looking towards the government and PTA to take necessary steps in reducing grey traffic.”

It is worth mentioning that over 90% of international incoming traffic is terminated on cellular mobile operators’ networks. This termination after ICH’s implementation has been reduced by more than 75% on average for all operators and has subsequently led to plummeting revenues.

After the implementation of ICH the overall international incoming traffic has reduced from 1.8 billion minutes to less than 500 million minutes per month while the corresponding mobile termination revenue on incoming international traffic has therefore drastically declined from PKR 1.6 billion to PKR 450 million per month.