India’s Telcos Jump After They Raise Mobile Phone Tariffs
Price hikes signal that a cut-throat price war in the nation may finally be easing.
(Bloomberg) -- Shares of India’s largest mobile phone service providers surged after they announced an increase in the cost of subscriptions to their plans, signaling a cut-throat price war in the nation may finally be easing.
Bharti Airtel Ltd., the third-largest wireless carrier, said it will increase prices of its most expensive plan by as much as 41%, while Reliance Jio Infocomm Ltd., the biggest telecom company by subscribers in India, will boost tariffs by as much as 40% from Dec. 6. Vodafone Idea Ltd. also announced a new pricing plan for prepaid customers on Sunday, which would be effective Dec. 3.
The companies had all indicated in recent weeks that they would increase prices, after the government estimated the industry owes billions of dollars in license fees and spectrum charges.
“This indicates a structural shift in the sector after a 3-year period of deep discounting by the new entrant Reliance Jio,” Neerav Dalal, an analyst at Maybank Kim Eng Securities, wrote in a note published Monday. Separately, Morgan Stanley upgraded Bharti Airtel to overweight from equalweight.
Vodafone Idea surged about 14% in Mumbai on Monday, Bharti Airtel gained 3.7%, and the latter’s dollar-denominated perpetual bonds jumped the most since they were priced in October. Reliance Industries Ltd., the flagship company of the group that includes the unlisted telecom unit, rose 2.3%. A gauge of 13 companies related to the telecom industry rose 2.6% to the highest level since September 2018.
The Indian venture of Vodafone Group Plc may be headed for liquidation unless the government eases off demands for mobile spectrum fees, the phone company’s chief executive officer warned last month. The industry has been caught up in a price war since Asia’s richest man, Mukesh Ambani, launched low-price rival Reliance Jio in 2016.
--With assistance from Jeanette Rodrigues, Ravil Shirodkar and Rahul Satija.
To contact the reporters on this story: Anurag Kotoky in New Delhi at akotoky@bloomberg.net;Ragini Saxena in Mumbai at rsaxena30@bloomberg.net
To contact the editors responsible for this story: Shamim Adam at sadam2@bloomberg.net, Sara Marley, Andrew Davis
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