New Delhi: Shares of Vodafone Idea Ltd. and rival Bharti Airtel Ltd. rallied after the wireless carriers said they planned to raise tariffs starting next month, the first increase since the entry of billionaire Mukesh Ambani into India’s telecommunications market three years ago triggered a price war.
Vodafone Idea surged as much as 21 per cent in Mumbai on Tuesday, while Bharti Airtel jumped 5.8 per cent.
“Mobile data charges in India are by far the cheapest in the world even as the demand for mobile data services continues to grow rapidly,” Vodafone Idea, formed by the merger of Vodafone Group Plc’s local unit with billionaire Kumar Mangalam Birla’s Idea Cellular Ltd., said in a statement late Monday. Higher rates will become effective December 1, it said.
Separately, a Vodafone Idea spokesman declined to disclose details about the possible tariff increase and plan details. The move comes after the wireless carrier reported the worst quarterly loss in Indian corporate history last week. The announcement of the increase was followed by Bharti Airtel, which also said it will raise phone rates from next month.
Vodafone Idea last week took a one-time charge related to a $4 billion demand from the government, leading to a net loss of Rs509 billion ($7.1 billion) in the three months through September. Saddled with about $14 billion of net debt, Vodafone Idea is fighting for survival after India’s top court last month ordered it and others, including Bharti Airtel to pay fees that the government said were due from prior years.
Indian telecom companies have been faced with high debt and low prices especially after the entry of Ambani’s Reliance Jio Infocomm Ltd. in 2016. That drove some to bankruptcy and led to the merger of others such as Vodafone with Idea.
The regulator, the Telecom Regulatory Authority of India, is likely to initiate discussions for bringing rationality in pricing, Bharti Airtel said in a statement justifying its move.
The acute financial stress in the sector has been acknowledged by all stakeholders and a high-level government panel is looking into providing appropriate relief, Vodafone Idea said Monday.