Vodafone Idea, Bharti Airtel Gain On Plans To Increase Call And Data Charges

Shares of Vodafone Idea jumped as much as 23.4 percent on Tuesday while Bharti Airtel shares rose close to 6 percent to 433.

On Monday, the two telecom companies announced their plans to raise tariffs for the viability of operations amid mounting dues. While the quantum of increase in prices for mobile calls and data were not disclosed, the changes will be effective from December.

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"The telecom sector is highly capital intensive with fast-changing technology cycles that require continuing investments. It is, therefore, extremely important that the industry remains viable to support the vision of Digital India," Bharati Airtel said in a statement.

Vodafone Idea said," The acute financial stress in the telecom sector has been acknowledged by all stakeholders and a high-level Committee of Secretaries (CoS) headed by the Cabinet Secretary is looking into providing appropriate relief."

On 14 November, Bharti Airtel reported a significant loss of Rs 23,044 crore for the September-ended quarter on making provisions worth Rs 28,450 crore towards adjusted gross revenue (AGR) dues. Vodafone Idea reported its biggest-ever quarterly loss of Rs 50,921 crore on the same day for the said quarter.

The losses of the two telecom companies were largely on account of the provisions they made towards the payment of dues on AGR after a recent Supreme Court ruling was made in the favour of Depart of Telecom, piling on their existing woes of competitive pricing.

Following the results, analysts said that Vodafone, with its low EBITDA generation, is likely to get out of the competition if no major measures are taken by the government to solve the AGR issues by waving of penalties, interest on penalties or other meaningful measures.

On 15 November, while at a press meet, Finance Minister Nirmala Sithraman in response to a query on the telecom sector, said, "I want no company to shut operations," and "I want all companies to flourish and serve their customers." She also said that a Committee of Secretaries (CoS) has been appointed to deal with telecom companies' financial problem, however, it "has not taken a final decision yet."

The two telecom operators said that they are in discussions with the government to seek appropriate relief.