Monday , July 6 2020

India’s beaten-down telcos soar on easing price war


A week after Vodafone Group Plc’s chief executive suggested the company’s India venture was headed for insolvency without government help, the shares have more than doubled over four trading days.
The rally followed plans by the nation’s top three carriers to raise tariffs, waving the white flag in a price war that dragged rates to some of the lowest levels in the world and caused record losses at Vodafone Idea Ltd. and Bharti Airtel Ltd.
Piyush Nahar, an analyst at Jefferies in Mumbai, said that he expects the government to postpone collection of some fees carriers owe and provide other relief as well after a Supreme Court ruling added about $13 billion to total fees due from carriers to the government.
Vodafone Idea soared by 138% since close of trading on November 14, while Bharti added 22% in the period as of Wednesday in Mumbai.

Reliance Industries Ltd., parent of No. 1 wireless carrier Reliance Jio Infocomm Ltd., has added 7% in the past two days, rallying to its highest on record, according to data compiled by Bloomberg.
Reliance Jio on Tuesday said it would raise prices over the next few weeks, after Vodafone Idea and Bharti Airtel said they planned to raise tariffs starting in December, the first increase since the entry of billionaire Mukesh Ambani’s Reliance Industries in 2016 turned price competition into a brutal war of attrition.
Nahar at Jefferies also said the telecom regulator is likely to consider setting a price floor for voice and data services, citing reports that the Telecom Regulatory Authority of India will initiate a consultation process on tariffs.
Hints of a price war truce come about five weeks after India’s highest court delivered a potentially crippling blow to Vodafone Idea and Bharti Airtel. In siding with the government’s position on how to calculate overdue spectrum and other fees, the Supreme Court ruled Vodafone Idea must pay a total of 283 billion rupees ($3.9 billion), while Bharti Airtel was stuck with a 217 billion rupee bill. Reliance Jio got off easy with a demand for 130 million rupees, as it had only been building up arrears since 2016.

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