Telecom Stocks Zoom As Companies Hike Tariffs

6
Telecom Stocks Zoom As Companies Hike Tariffs
Spread the love

Telecom stocks jumped on Monday after three of India’s telecom giants – Bharti Airtel, Vodafone Idea and Reliance Jio – announced higher tariffs from this month. Bharti Airtel and Vodafone Idea shares soared as much as 9.82 percent and 24.30 percent respectively, whereas shares in Reliance Industries – the parent company of Reliance Jio Infocomm – rose 4.07 percent at the strongest level in the morning. Analysts say the higher mobile tariffs will ease some of the pressure on the telecom service providers’ balance sheets.

Vodafone Idea and Bharti Airtel have decided to increase the tariffs with effect from December 3, while Reliance Jio will implement the hike from December 6.

The three telecom companies together account for more than 90 percent of the country’s 118 crore mobile subscribers.

Vodafone Idea and Bharti Airtel have announced new prepaid plans priced from Rs 19 to Rs 2,399, offering a validity period ranging from two days to 365 days.

Reliance Jio has not outlined its plans as yet but said that its tariffs will be 40 percent higher and bundled with 300 percent more benefits to the customers.

The hike in tariff comes in the backdrop of record losses reported by both Bharti Airtel and Vodafone for the quarter ended September 30 due to huge provisions towards dues owed over the telecom unit for adjusted gross revenue (AGR).

A Supreme Court ruling on the adjusted gross revenue (AGR) in October came as a huge setback for telecom companies, as it allowed the telecom department to recover dues worth Rs 1.33 lakh crore from them.

The top court rejected the telecom companies’ appeal against the government’s definition of AGR.
The DoT and the mobile carriers have done at differences aloft the sense of AGR. The organizations claim that AGR should include just interest gathered from core duties, while the DoT says AGR should include all revenue.

Telecom providers in the country pay the telecom department nearly 3-5 percent of their adjusted gross revenue in usage charges for spectrum or airwaves and 8 percent of AGR as license fees.

Additionally, Vodafone Idea and Bharti Airtel have an outstanding debt of more than Rs 1 lakh crore each. According to government data, the liabilities of Bharti Airtel add up to nearly Rs 35,586 crore, of which Rs 21,682 crore is license fee.

LEAVE A REPLY

Please enter your comment!
Please enter your name here