Bharti Airtel, Vodafone Idea Shares Surge On Price Hike Announcement

Bharti Airtel and Vodafone Idea both took a hit last month after India's top court ordered them and others to pay billions in fees related to spectrum and licences that the government said were due from prior years

Vodafone and Bharti set to raise prices help pay government bill

Mumbai: Bharati Airtel, Vodafone and Idea have announced on Monday that the charges for mobile phone calls and data are being enhanced from next month.

After introducing an interconnect usage charge (IUC) last month, the Mukesh Ambani-led company has reportedly now made a decision to hike its tariffs for both its phone call and internet services.

Vodafone Idea shares on the BSE gained 21.47% at ₹4.47 on Monday, as investors anticipate government relief for the sector. Vodafone Idea cited "acute financial crisis" as reason behind the increase in tariffs, whereas Airtel said the move is meant to keep the industry and the company "viable".

The global brokerage house maintained its hold rating for Vodafone Idea and slashed target price to Rs 2.40 from Rs 8 as company would still lose a majority of high ARPU subscribers to Bharti Airtel.

Bharti Airtel and Vodafone-Idea Ltd have announced plans to increase tariffs for customers from December 1. Just four years ago, Vodafone Idea (Idea Cellular earlier) was the most valuable member of the Aditya Birla group and the fastest growing mobile operator in the country with the industry's best financial ratios.

This led to Vodafone-Idea and Airtel announcing Rs 50,900 crore and Rs 23,000 crore losses for the July-September quarters. The merged entity Vodafone Idea came into existence on August 31 a year ago as the biggest telecom operator in the country with 408 million mobile customers.

However, the telco reiterated its commitment to play its due role in realising the vision of Digital India by continuing to provide seamless mobile services to customers across India despite posting a loss of ₹50,921 crore for the second quarter, the highest in India Inc.

"Our assessment suggests the possibility of 15 percent hike by Vodafone Idea (VIL) and Bharti". The increase will kick in at the start of next month. Telecom prices in India are now the cheapest in the world, according to Mint. "Accordingly, Airtel will appropriately increase price offerings in the month beginning December", Bharti Airtel said in a press release. By that both are liable to pay about Rs 74,000 crore by January 24, 2020, though a panel of Secretaries to the Central government are looking at options of giving them some relief through cut in levies and moratoriums and a longer repayment period.

Sources said the department is of the view that the refund should be adjusted against this demand as there have been some concerns raised in a section of media about the very existence of the company if it were asked to cough up the past statutory liabilities.

With the new plans, both Airtel and Vodafone could see a loss in subscriber count as Jio continues with its aggressively priced tariff plans and offers.

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