Reliance Jio extends free services, Bharti Airtel, Reliance Communications, Idea Cellular shares plunge
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Three telecom companies lost a combined R4,288 crore in market capitalisation on Thursday after Reliance Industries chairman Mukesh Ambani said Reliance Jio Infocomm (RJio) would extend its free offers till March 31, 2017.
Shares of telecom majors such as Bharti Airtel, Idea Cellular and Reliance Communications fell between 1.7% and 5.9%.
On September 1, 2016, these companies lost R13,165.55 crore in market value when Ambani had announced aggressive pricing for Jio’s services. Ambani had said that RJio will sell its 4G Internet data for as low as Rs 50 per gigabyte (GB), leading to speculations of a price war.
Leading the fall was Idea, whose stock fell by 5.93 % and ended the session at R72.95. The stock has lost 22% since September 1, 2016. The share price of Reliance Communications fell by 5.05% and closed at R35.75. The scrip fell by 33% in the past three months. Bharti Airtel’s share price declined by 1.66% and closed the session at R319.
Analysts had warned that the entry of RJio will affect revenues and profits of the incumbent telecom players. In a note to investors in November, Jefferies had said that “cannibalisation of network traffic (voice and data) by RJio” will be a big risk for incumbents in the December quarter.
With the extension of RJio’s free offers, analysts fear that the effect on the profitability will continue by another quarter.
The BSE Telcom Index fell by 1.02% and closed the session at 1181.46.
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Reliance Jio has become the world's largest mobile operator in data traffic consumption, surpassing China Mobile. According to global analytics firm Tefficient, the Indian telecom operator's total traffic reached 40.9 exabytes in the January-March quarter, compared to China Mobile's 38.
Jio also has the second-largest 5G subscriber base globally, with 108 million users. More than 28 per cent of its total wireless data traffic is now consumed by 5G users, said the company in an analyst presentation.
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Congress leader Rahul Gandhi on Wednesday accused Prime Minister Narendra Modi of waiving off loans worth Rs 16 trillion of his billionaire friends, and said the country will never forgive him for this "crime".
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