Stocks

Telecom stocks plunge as Jio unveils new post-paid plan

BL Internet Desk May 11 | Updated on May 11, 2018

Shares of Idea fell as much as 8.1 per cent to their lowest since February 2011, while Airtel declined about 5.8 per cent.

Shares of telecom services providers fell sharply as Reliance Jio Infocomm Ltd has unveiled a new post-paid plan to take on bigger rivals such as Bharti Airtel Ltd and Idea Cellular Ltd.

Reliance Jio Infocomm (RJio), a wholly-owned subsidiary of Reliance Industries, is set to launch a post-paid tariff plan of Rs 199 per month offering 25 GB data. The plan, ‘JioPostpaid’, offers free voice calls and SMS, and subscription to Jio apps. The new scheme will be available from May 15.

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Shares of Idea fell as much as 8.1 per cent to their lowest since February 2011, while Airtel declined about 5.8 per cent.

Reliance Jio's entry into the telecoms sector has set off a brutal price war among operators as they drastically cut prices to compete with Jio's bottomed-out plans.

For the top three big telecom operators in India, post-paid users make up only 7 per cent of the total subscribers, but contribute more than 20 per cent to their revenues, says Jefferies.

Airtel and Idea are expected to launch new plans in response to Jio's offer and thus see a further decline in their average revenue per user, it adds.

Any 10 percent cut in post-paid prices will lead to an EBITDA decline of 12 per cent and 6 per cent for Idea and Airtel, respectively, the brokerage adds.

(With inputs from Reuters)

Published on May 11, 2018

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