Airtel, Vodafone shares rise after Jio's move on call connect charges

Shares of telecom companies on Thursday rose up to 7 percent in the wake of Reliance Jio deciding to levy call connect charges from customers, a move that is likely to be followed by rivals. Bharti Airtel shares jumped 7.19 percent to touch a 52-week high of Rs 385 apiece on the NSE. In afternoon trade, it was up 4.88 percent up at Rs 376.95.

Similar trends were witnessed on the BSE too. The scrip rallied 6.65 percent to hit a 52-week high of Rs 384.85 apiece. After shedding some gains, the shares were trading 4.91 per cent higher at Rs 376.90 in the afternoon session. Vodafone Idea were trading 6.34 percent higher at Rs 6.21 on the BSE and was up nearly 6 percent at Rs 6.20 on the NSE.

Unlisted Reliance Jio Infocomm is part of Reliance Industries, whose shares gained 2.70 percent at Rs 1,361.55 on the BSE. On the NSE, the scrip went up 2.78 percent to Rs 1,361.55. According to a Kotak Institutional Equities research report, Bharti Airtel and Vodafone Idea can take this as an opportunity to become more competitive.

The report noted that Jio's move would dilute the pricing architecture, one of the most critical changes Jio brought to the industry. "If Jio gets Rs 15 ARPU (Average Revenue Per User) uplift, we believe Airtel and Vodafone Idea could see a Rs 8-odd and Rs 6-odd ARPU uplift, respectively, as well," the report said.

In a research note, UBS said it remains to be seen whether Bharti and Vodafone Idea would follow Jio in introducing similar charges for off-net calls, "although we see high chance that they follow Jio". On Wednesday, Reliance Jio said it would charge 6 paise per minute for voice calls made by its users to mobile phones networks of rivals after indications that call connect charge may not end by the previously mooted deadline of December 31.

Bharti Airtel raising USD 750 million (about Rs 5,330 crore) from investors based in Asia, Europe and the US, also helped boost the company's shares.