On December 2nd, Share Prices of telecom stocks including Bharti Airtel and Vodafone Idea jumped to 17 percent intraday after the companies raised their prepaid voice and data services prices.
The government and the Indian Telecom Regulatory Authority are no longer battling to raise the world’s lowest call and data rates, concluded a meeting between the regulator and the beleaguered sector’s four players.
It was left to Vodafone Idea, Bharti, Reliance Jio, and Bharat Sanchar Nigam Ltd to thrash out their share prices among themselves. Jio and state-run BSNL based in Mumbai are unwilling to raise tariffs unless there is a government fiat, analysts say.
Telecom operator Vodafone Idea said on December 1 that for each outgoing call made by customers to other operators ‘ network, it will charge 6 paise per minute. This is after Vodafone Idea mocked Reliance Jio to reclaim the interconnect access fee for a similar charge that it had launched in October this year.
The Indian Telecom Regulatory Authority (TRAI) sets IUC charges. At the moment, it is 6 paises per minute. In response to Jio’s IUC introduction, Vodafone Idea had tweeted on unlimited plans that on their network ‘ free means free. ‘
Last month, Vodafone Idea noted a consolidated loss of Rs 50,921 crore. It is the highest loss by any Indian corporation. For the September quarter as a result of the Supreme Court’s decision in the Adjusted Gross Revenue (AGR) case.
Share Prices Alert Investors
“Even though the deferral in spectrum payments have brought relief to the incumbents, but there is still a lot of pain. 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.
Together, the three telecommunications giants account for over 90% 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 states in a statement.
Vodafone Idea Limited quoting Rs 8.08 at 09:58 hrs, up Rs 1.25, or 18.30%. It touched a Rs 8.44 intraday high and a Rs 7.51 intraday low. At Rs 476.60, Bharti Airtel quotes at Rs 34.30, or 7.75 percent. It has touched a Rs 485.75 52-week high.
At Rs 1,595, Reliance Industries quoted Rs 44.10, or 2.84 percent. It hit a Rs 1,614.00 52-week high.