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

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