November 19, 2019 / 10:56 AM / 18 days ago

India's Airtel, Vodafone Idea jump on price hikes announcement

BENGALURU (Reuters) - Shares of Indian telecom operators Bharti Airtel Ltd (BRTI.NS) and Vodafone Idea Ltd (VODA.NS) surged on Tuesday after the companies announced tariff hikes that will take effect next month.

FILE PHOTO: A man and two passengers ride on a scooter past a shop displaying the Vodafone logo on its shutter in Jammu November 21, 2011. REUTERS/Mukesh Gupta

Airtel’s shares closed up 7.37%, their highest since January last year, while Vodafone’s stock ended 35.96% higher and recorded its best one-day gain ever during the day’s trade.

Both stocks gained for a third straight session since hopes that the government would step in took effect.

Vodafone has gained 68.98 billion rupees ($960.06 million) in market cap, while Airtel added 237.52 billion rupees ($3.31 billion) to its market value since Friday’s close.

The companies have languished in recent weeks after India’s Supreme Court upheld a telecoms ministry demand that mobile carriers must pay a combined $13 billion in dues.

Vodafone and Airtel, two of India’s top three telecom firms, must pay the bulk of the dues and both made huge provisions for them in their September-quarter results, resulting in record multi-billion-dollar losses.

The companies said separately on Monday they were hiking prices in light of the financial stress in the sector.

“This is a positive,” analysts at Jefferies said of the price hikes. “The key will be Jio’s response to the price hike. We think Jio could likely follow.”

A spokeswoman for Reliance Jio said the company did not have any comments.

Mobile data prices have steadily slid since Reliance (RELI.NS) Jio’s launch in 2016, triggering a price war and pressuring incumbents Airtel and Vodafone.

Reporting by Derek Francis in Bengaluru; editing by Uttaresh.V

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