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Vodafone Idea, Airtel Crack Up To 9%: Here's Why

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Telecom stocks in Wednesday's session (September 23, 2020) cracked up to 9% after Reliance Jio, its rival enterprise introduced a host of postpaid plans with several services such as complimentary services of Netflix, Disney plus Hotstar and Amazon subscriptions.

And on the move, Bharti Airtel hit a low of Rs. 433.5 per share on the BSE, dragging 7.9%, which is its lowest level in seven months. Vodafone Idea also fell 8.7% in trade today to hit a price of Rs. 9.35 on both the exchanges.

Vodafone Idea, Airtel Crack Up To 9%: Here's Why
 

The RJio which caters to less than 1% of its total customers in the post paid segment has introduced plans with tariff at par with that of rivals. Nonetheless, the base fare is available at a 20% cheaper rate. Also, the plan is attractive with complimentary services such as free OTT services as well as family packs and international roaming.

Also there is unique first time in-flight mobile connectivity offered with Reliance Jio postpaid plans.

"A large chunk (more than two-thirds) of postpaid category in our view, is driven by corporate connections in India (more sticky and mutual terms based). Thus, the response of non-corporate segment will be key to the churn," ICICI Securities said in a note.

We see the offering as having the potential to drive at least some churn from incumbents, unless they match the OTT offers. Matching of the offering, on the other hand, could result in additional annual costs to Airtel and Vodafone Idea. The announcement, however, puts VIL in a spot, as it would have to weather churn through cost increase, the brokerage firm said.

GoodReturns.in

Story first published: Wednesday, September 23, 2020, 13:10 [IST]
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