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Tuesday, December 10, 2019

Telecom stocks surge after companies increase tariffs

Meanwhile, Cellular Operators Association of India said Monday that rise in price of mobile calls and internet rates is beneficial for customers, will boost government revenue mop-up and help in creating jobs by improving financial health of the sector. 

By: ENS Economic Bureau | Mumbai | Published: December 3, 2019 2:32:26 am
Analysts do not rule out further price hikes in times to come, as the current hike may not be sufficient for sustainability of Vodafone Idea.  (Representational image)

Shares of telecom firms rallied on Monday, a day after the announcement of tariff hikes by them of up to 50 per cent, as the move instilled hopes of revival in their financial health in the coming quarters.

Shares of Bharti Airtel rose 3.67 per cent to end the day at Rs 458.55 — its highest level since January 2018 — while Vodafone Idea (VIL) rallied 14.06 per cent to settle at Rs 7.79. Reliance Industries, the parent of Jio, rose 2.3 per cent to close at a record-high of Rs 1,586.30 on the BSE. RIL’s share price has moved up by 17 per cent since the first tariff hike (10-15 per cent tariff increase) was announced on October 9, while shares of Bharti and VIL have risen 23 per cent and 17 per cent respectively in the same period against 7 per cent rise in the Sensex.

Analysts do not rule out further price hikes in times to come, as the current hike may not be sufficient for sustainability of Vodafone Idea.

Bharti and VIL announced tariff hikes of up to 50 per cent on their pre-paid plans, while Jio said it would hike its tariffs by up to 40 per cent. The new tariffs will come into effect from December 3 for Bharti and VIL, while that of Jio from December 6. “VIL and Bharti announced tariff hikes were better than expected,” said analysts at Bank of America and Merrill Lynch.

While low and high denomination tariffs have been hiked by upto 41 per cent , the popular plans saw tariff hikes of 25-30 per cent . For instance for VIL and Bharti, the minimum Rs 35 denomination plan has now moved to Rs 49. For VIL, popular 1.5 GB per day, 84 day pack will cost 31 per cent more at Rs 599 versus Rs 458 (33 per cent hike for Bharti) and 25 per cent hike for Rs 199 plan (1.5 GB/day pack).

Meanwhile, Cellular Operators Association of India said Monday that rise in price of mobile calls and internet rates is beneficial for customers, will boost government revenue mop-up and help in creating jobs by improving financial health of the sector.

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