February 22, 2017 / 6:07 AM / 5 months ago

Reliance Industries shares surge to 7-1/2-year high on plans for Jio

2 Min Read

Commuters are reflected on an advertisement of Reliance Industries' Jio telecoms unit, at a bus stop in Mumbai, India, February 21, 2017.Shailesh Andrade

REUTERS - Shares of Reliance Industries Ltd (RELI.NS) rose as much as 7.7 percent to a more than seven-and-a-half-year high, as investors welcomed plans by the company's Jio telecom unit to start charging for its services, albeit at discounted rates.

The gains came after Reliance Jio Infocomm owner Mukesh Ambani unveiled on Tuesday a special plan that would provide customers signing up by the end of March with unlimited data and free voice services for a year at a rate of 303 rupees ($4.52) per month.

The offer is priced below its competitors, but the move to paid services is a step to start charging customers after Reliance launched in September with offers for free data, that are scheduled to run until the end of March.

Analysts said the move would help Reliance add more customers and retain a substantial portion of the more than 100 million subscribers it has already added, helping drive up its profit.

"We believe this offer will provide significant value for existing 4G customers," Edelweiss Securities said in a note, adding that it expected Jio's average revenue per user to increase while potentially breaking even on the operating profit front by the year ending in March 2019.

Shares of Reliance Industries were up 7.26 percent as of 0545 GMT, after rising to their highest since June 15, 2009.

Shares of rival companies also recovered from initial losses on hopes Jio's move to charge customers would help reduce some of the cutthroat competition in the sector.

Bharti Airtel (BRTI.NS), India's biggest mobile operator, rose 1.9 percent after falling 3.3 percent on Tuesday.

Smaller rival Idea Cellular (IDEA.NS) rose 0.28 percent after declining 0.1 percent in the previous session.

Reporting By Samantha Kareen Nair in Bengaluru, Additional reporting by Aby Jose Koilparambil; Editing by Subhranshu Sahu

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