Vodafone Idea and Bharti Airtel stocks surged in early trade today after the telcos said they plan to increase mobile service rates from December 1. Bharti Airtel share price hit a fresh 52-week high of Rs 432.95 against previous close of Rs 409.15 on BSE.
While Bharti Airtel share price rose up to 5.82% to Rs 432.95, Vodafone Idea stock rose up to 20.36% to Rs 5.39 on BSE.
Bharti Airtel share price has been gaining for the last three days and risen 17.84% during the period.
The stock opened with a gain of 4.36% at Rs 427. Its market cap surged to Rs 2.21 lakh crore on BSE. Bharti Airtel share price has risen 38.88% during last one year and gained 49.44% since the beginning of this year.
Vodafone Idea share price has risen 76.95% during the last three sessions on BSE.
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However, the mid cap stock has lost 80% in last one year and fallen 76% since the beginning of this year.
Vodafone Idea and Bharti Airtel on Monday said they plan to raise mobile service rates from December 1. Vodafone Idea cited "acute financial crisis" as reason behind the increase in tariffs, whereas Airtel said the move is meant to keep the industry and the company "viable".
"To ensure that its customers continue to enjoy world class digital experiences, Vodafone Idea will suitably increase the prices of its tariffs effective December 1, 2019," Vodafone Idea said.
Bharti Airtel said, "The acute financial stress in the telecom sector has been acknowledged by all stakeholders and a high level Committee of Secretaries (CoS) headed by the Cabinet Secretary is looking into providing appropriate relief."
"The telecom sector is highly capital intensive with fast changing technology cycles that require continuing investments. It is, therefore, extremely important that the industry remains viable to support the vision of Digital India. Accordingly, Airtel will appropriately increase price offerings in the month beginning December," the Sunil Mittal-led telco said.
Things have been tough for the telecom sector for quite some time now. From a dozen in March 2016, the number of players in the industry has dwindled to mere five - Reliance Jio, Vodafone Idea, Bharti Airtel, BSNL and MTNL. Out of these, the last four have substantial losses to their names.
For the quarter ended September 30, 2019, Vodafone Idea and Bharti Airtel reported a cumulative loss of almost Rs 74,000 crore between them. During the second quarter of this fiscal, Bharti Airtel reported a loss of Rs 23,045 crore, whereas Vodafone Idea saw losses balloon to Rs 53,921 crore due to provisioning for AGR payout to Department of Telecommunications (DoT).
By Aseem Thapliyal