Vodafone Idea, Bharti Airtel to raise mobile tariffs in Dec

Bloomberg

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 in 2016 triggered a price war.
Vodafone Idea surged as much as 30% in Mumbai, while Bharti Airtel rallied as much as 6.6%. Reliance Industries Ltd’s shares rose more than 3% to a record on optimism Reliance Jio Infocomm Ltd will also benefit from higher tariffs.
“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. Higher rates will become effective from 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. The announcement of the increase was followed by Bharti Airtel, which also said it will raise phone rates from next month.
Vodafone Idea took a one-time charge related to a $4 billion demand from the government, leading to a net loss of 509 billion rupees ($7.1 billion) in the September quarter.
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 Jio. That drove some to bankruptcy and led to the merger of others such as Vodafone with Idea.
The acute 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.
“The key will be Jio’s response to the price hike. We think Jio could likely follow,” Jefferies analysts wrote in a note.