November 19, 2019 / 10:57 AM / a month ago

Airtel, Vodafone Idea jump on price hikes announcement

BENGALURU (Reuters) - Shares of Indian telecom operators Bharti Airtel Ltd and Vodafone Idea Ltd surged on Tuesday after the companies announced tariff hikes that will take effect next month.

A man checks his mobile phone as he walks past a shop displaying the Vodafone logo on its shutter in Mumbai January 15, 2014. REUTERS/Danish Siddiqui/File Photo

Airtel’s shares closed up 7.37%, their highest since January last year, while Vodafone’s stock ended 35.96% higher and recorded its best one-day gain ever during the day’s trade.

Both stocks gained for a third straight session since hopes that the government would step in took effect. [nL4N27V1TT]

Vodafone has gained 68.98 billion rupees ($960.06 million) in market cap, while Airtel added 237.52 billion rupees ($3.31 billion) to its market value since Friday’s close.

The companies have languished in recent weeks after India’s Supreme Court upheld a telecoms ministry demand that mobile carriers must pay a combined $13 billion in dues.

Vodafone and Airtel, two of India’s top three telecom firms, must pay the bulk of the dues and both made huge provisions for them in their September-quarter results, resulting in record multi-billion-dollar losses. [nL4N27U4BZ][nL4N27U35B]

The companies said separately on Monday they were hiking prices in light of the financial stress in the sector.

“This is a positive,” analysts at Jefferies said of the price hikes. “The key will be Jio’s response to the price hike. We think Jio could likely follow.”

A spokeswoman for Reliance Jio said the company did not have any comments.

Mobile data prices have steadily slid since Reliance Jio’s launch in 2016, triggering a price war and pressuring incumbents Airtel and Vodafone.

($1 = 71.8500 Indian rupees)

Reporting by Derek Francis in Bengaluru; editing by Uttaresh.V

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