Telecom stocks including Bharti Airtel and Vodafone Idea jumped up to 17 percent intraday on Monday after the companies raised prices of their prepaid voice and data services.
The government and the Telecom Regulatory Authority of India are no longer batting for raising the world’s lowest call and data rates, concluded a meeting between the regulator and the four players in the beleaguered sector.
It was left to Vodafone Idea, Bharti, Reliance Jio and Bharat Sanchar Nigam Ltd to thrash out their pricing among themselves. Mumbai-based Jio and state-run BSNL aren’t keen to raise tariffs unless there is a government fiat, analysts say.
Telecom operator Vodafone Idea on December 1 said it will charge 6 paise per minute for every outgoing call made by customers to the network of other operators. This is after Vodafone Idea mocked Reliance Jio for a similar charge it had introduced in October this year to recover the interconnect usage charge.
IUC charges are set by the Telecom Regulatory Authority of India (TRAI). This is currently fixed at 6 paise per minute. In response to Jio's introduction of IUC, Vodafone Idea had tweeted that on its network 'free means free' on unlimited plans.
Vodafone Idea had last month reported a consolidated loss of Rs 50,921 crore -- the highest ever loss posted by any Indian corporate -- for the September quarter on account of liability arising out of the Supreme Court's order in the adjusted gross revenue (AGR) case.
"Even though the deferral in spectrum payments have brought relief to the incumbents, but there is still a lot of pain left. Stock markets have made a turnaround in these stocks, but the ground reality cannot change in a day. With piles of debt and negative to minimal free cash flows, these companies will take a long time to stand up on their feet. Hence, investors should avoid such stocks as of now," said Umesh Mehta, Head of Research, Samco Securities.
The three telecommunication giants including Bharti Airtel, Vodafone Idea and Reliance Jio together account for over 90 percent of India’s 1.18 billion mobile subscribers.
“Airtel’s new plans represent tariff increases in the range of a mere 50 paise per day to Rs 2.85 per day and offer generous data and calling benefits," the company said.
“Jio will be introducing new all-in-one plans with unlimited voice and data. These plans will have a fair usage policy for calls to other mobile networks. The new plans will be effective from 6th December 2019,” the company said in a statement.
At 09:58 hrs Vodafone Idea Limited was quoting at Rs 8.08, up Rs 1.25, or 18.30 percent. It has touched an intraday high of Rs 8.44 and an intraday low of Rs 7.51. Bharti Airtel was quoting at Rs 476.60, up Rs 34.30, or 7.75 percent. It has touched a 52-week high of Rs 485.75.Reliance Industries was quoting at Rs 1,595, up Rs 44.10, or 2.84 percent. It has touched a 52-week high of Rs 1,614.00.LIVE NOW... Video series on How to Double Your Monthly Income... where Rahul Shah, Ex-Swiss Investment Banker and one of India's leading experts on wealth building, reveals his secret strategies for the first time ever. Register here to watch it for FREE.