Bharti Airtel and Vodafone Idea shares fell up to 14%, a day after Reliance Jio rolled out postpaid tariff plans to enhance its competitive positioning, which could potentially trigger another round of price competition.
While Bharti Airtel shares fell 10% to Rs 423.95, Vodafone Idea stock was trading nearly 14.05% lower at Rs 8.81 on Bombay Stock Exchange (BSE).
Reliance Jio Infocomm launched the 'JioPostpaid Plus' service, offering several postpaid tariff plans in the range of Rs 399-1,499, offering an extensive content portfolio at a rate which is 6%-20% cheaper than Bharti and VIL.
As per experts, Jio, which began operations in 2016, is in the stage to tap FTTH, postpaid and low-end prepaid customer segments.
Emkay Research in its note said, "In the past, Jio has tried to capture the post-paid market with aggressive pricing while consumer stickiness and a lack of content offerings prevented it from achieving any notable gains. However, this time extremely aggressive content offerings (Netflix, Amazon prime, Disney+Hotsar VIP) could be the key attraction for consumers. Jio has priced its base plan (Rs399/month) at a 20% discount to Bharti along with OTT apps."
KEI said postpaid revenues for the industry have been declining since the launch of Jio and added," An acceleration of addition to Jio's subscriber base as well as JioMart's customer base/orders fulfilment/revenues in the medium term is crucial for RIL to strengthen its digital ecosystem offering."
It added," Jio's aggression in the telecom sector seems to back post-RIL's significant capital raise, perhaps with an endeavour to fill the gaps in FTTH, postpaid and low-end prepaid customer segments".
Kotak Institutional Equities has rated 'ADD' to RIL stock at a fair value of Rs 2,211, with fair value at Rs 2,150.
The brokerage also has an add rating on Airtel, with TP of Rs 471 and an upside of 51%, fair value of Rs 710. Axis Securities also kept a buy rating on Airtel stock with TP at Rs 700, having 50% upside.
Meanwhile, Airtel stock has fallen almost 10% in the last 6 days, while VI stock has reduced by almost 20% in the same period.
Following the news, Bharti Airtel stock price closed 7.89% lower at Rs 433.90 and VI shares ended at Rs 9.22 apiece, falling 10.05% on BSE.