- The reason Jio gains more is that Airtel and Vodafone Idea have left postpaid tariffs untouched
- Jio is likely to position its tariffs at far more attractive levels than competition to sustain the pace of its market share gains
The tariff hikes announced by Vodafone Idea Ltd and Bharti Airtel Ltd over the weekend have been far higher than the Street’s estimates. So much so that it will help Airtel’s India mobile business swing back into profits at the pre-tax level, after several quarters of losses. In Vodafone Idea’s case, losses will reduce to a great extent. But given the fast pace of its market share losses, it would need to do much more to retain the gains from the tariff hike.
The biggest gainer, by far, is Reliance Industries Ltd. Analysts at JM Financial Institutional Equities estimate incremental quarterly revenues of Rs2400 crore and ₹2100 crore respectively for Airtel and Vodafone Idea as a result of tariff hikes. But in the case of Jio, which has said it will raise tariffs by 40% without giving details, JM’s analysts expect incremental quarterly revenues of as much as Rs3900 crore. Incremental revenues are compared to reported revenues in the September quarter, assuming no change in the respective subscriber base of the three companies.
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These higher gains for Jio and the concerns around Vodafone Idea are reflected in the reaction on the Street as well. The market capitalization of Reliance Industries rose by about Rs24000 crore on Monday morning, while that of Airtel and Vodafone Idea gained Rs17000 crore and Rs4200 crore respectively.
Source: livemint
