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Airtel, Idea shares fall as Jio unveils new Rs 199 postpaid plan

Airtel, Idea shares fall as Jio unveils new Rs 199 postpaid plan
Highlights

Shares of Indian telecom services providers fell sharply on Friday after Reliance Jio Infocomm Ltd unveiled a new post-paid plan as it takes on bigger rivals such as Bharti Airtel Ltd and Idea Cellular Ltd.

Shares of Idea fell as much as 8.1% to their lowest since February 2011, while Airtel declined about 5.8%.

Shares of Indian telecom services providers fell sharply on Friday after Reliance Jio Infocomm Ltd unveiled a new post-paid plan as it takes on bigger rivals such as Bharti Airtel Ltd and Idea Cellular Ltd.

Jio, the telecom arm of Reliance Industries Ltd, introduced an unlimited domestic post-paid plan for Rs 199 and international calling at Rs 0.50 per minute on Thursday.

Shares of Idea fell as much as 8.1% to their lowest since February 2011, while Airtel declined about 5.8%.

Reliance Jio’s entry into the telecoms sector has set off a brutal price war among operators as they drastically cut prices to compete with Jio’s bottomed-out plans.

For the top three big telecom operators in India, post-paid users make up only 7% of the total subscribers, but contribute more than 20% to their revenues, said Jefferies.

Airtel and Idea are expected to launch new plans in response to Jio’s offer and thus see a further decline in their average revenue per user, Jefferies added.

Any 10% cut in post-paid prices will lead to an EBITDA decline of 12% and 6% for Idea and Airtel respectively, said Jefferies.

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