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Telco shares zoom on tariff hike

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Bharti Airtel touched a new 52-week high of ₹485.75

Shares of Reliance Industries (RIL) and Bharti Airtel touched a new 52-week high of ₹1,614 and ₹485.75 on Monday, while shares of Vodafone Idea breached their upper circuit limits of ₹7.85 after the telcos announced tariff hike for pre-paid customers on Sunday.

RIL shares were trading up 2.28% at ₹1,586.3 in a flat Mumbai market on Monday, valuing the company at ₹10.05 lakh crore.

While Vodafone Idea and Bharti Airtel have increased tariffs by 15-47% across prepaid plans from December 3, Reliance Jio will also hike tariffs by up to 40% from December 6. Shares of Bharti Airtel on the BSE rose 3.67% to close at ₹442.3, valuing the firm at ₹2.35 lakh crore, while Vodafone Idea shares rose 14.06% to close at ₹7.79, valuing the company at ₹22,384 crore.

The three telecommunication giants together account for over 90% of India’s 1.18 billion mobile subscribers, with the market share of around 30% each split evenly among them.

“Tariff hike came as a lifeline for the debt-laden telcos like Vodafone Idea and Bharti Airtel. More hikes are anticipated in the coming quarters to keep the sector healthy and investors’ wealth protected,” Paras Bothra, president - Equities, Ashika Stock Broking, told The Hindu.

Jefferies Equity Research anticipates the revenue increase to be between 11 and 23%, lower than the 40% hike announced by the telcos. The lower hike is due to data elasticity resulting in downtrading and SIM consolidation, no increase in postpaid rates and lower hike in voice call charges.

Shares of Mahanagar Telephone Nigam Limited (MTNL) also closed up 2% at ₹9.17 before hitting its upper circuit limit of ₹9.43 on Monday.

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Printable version | Dec 16, 2019 6:15:14 PM | https://www.thehindu.com/business/telco-shares-zoom-on-tariff-hike/article30142120.ece

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