Bharti Airtel took the biggest hit on its market capitalisation on BSE today a day after Mukesh Ambani-owned Reliance Jio announced its new Rs 199 per month postpaid offer. Idea Cellular and Reliance Communications stocks were the other key shares which were affected by the prospects of another price war to protect market share.
Bharti Airtel, Idea Cellular and Reliance Communications stocks fell within 3 to 13% range after the latest entrant in the telecom market Reliance Jio announced its new postpaid offering in the sector. While market leader Bharti Airtel's stock fell up to 7.5% to 381.20 level, Idea Cellular lost nearly 13% to hit an intra day low of 50.845 level.
Anil Ambani-led Reliance Communications stock fell up to 4.65% and hit a low of 13.30 level.
The Bharti Airtel stock closed 6.44% or 26 points lower at 385.70 on BSE. The stock lost nearly Rs 10,613 crore in market capitalisation in today's trade. The Idea Cellular stock too ended 11.83% lower at 51.45 level. Reliance Communications fell 1.79% to 13.70 level.
Reliance Jio owned by industrialist Mukesh Ambani on Thursday announced its unlimited India postpaid plan at Rs 199 per month offering 25 GB data, bringing another disruptive pricing scheme in the telecom market with effect from May 15, 2018.
The new scheme threatens existing players with their users using Mobile number portability (MNP) to take advantage of the low fare post paid schemes. This would dent the subscriber base of telcos and lead to a fall in their revenues until they introduce similar offers to retain customers.
Most players in the market are offering entry-level postpaid services at almost double the rates at which Reliance Jio has unveiled its new post paid plan. For the top three big telecom operators in India, post-paid users make up only 7 percent of the total subscribers, but contribute more than 20 percent to their revenues, said Jefferies.
Any 10 percent cut in post-paid prices will lead to an EBITDA decline of 12 percent and 6 percent for Idea and Airtel respectively, said Jefferies.
The JioPostpaid plan offers free voice calls, unlimited text messages, pre-activated international calling without any security deposit, and one-click international roaming activation, again without any security deposit. The pack also offers premium subscription of Jio Apps.
Reliance Jio is also offering international calling starting from 50 paise per minute, which will be charged for calls to USA and Canada, and will go on till Rs 6 per minute. No security deposit or service charge will be applicable on international calls from JioPostpaid.
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