Voice call tariffs are set to rise as Bharti Airtel and Vodafone, the two big players in the wireless telephony business, announced a price hike on Wednesday.
Bharti Airtel, India's biggest mobile carrier will hike voice call tariffs in a phased manner and not across all circles simultaneously. Bharti Airtel is reducing free minutes by 10-25 per cent and has increased prices of some call vouchers for prepaid customers by Rs 5-15, sources said.
"We have been reiterating that increase in prices is inevitable, which is reflected from the fact that despite rising costs, tariffs have been falling over the past 12 quarters," Bharti Airtel said in a statement. The company gave no detail of the call price increase.
Aditya Birla group promoted Idea Cellular said it is withdrawing promotional offers on voice calls in some circles.
The news will adversely affect consumers, but investors have a reason to cheer as higher call rates would translate into better margins for the company.
Bharti shares jumped sharply on the news of tariff hike. The stock traded 3.5 per cent higher at Rs 363.45 on the National Stock Exchange against a 0.12 per cent gain in the Nifty as of 10.45 a.m. Bharti was the top Nifty gainer.
Boost for Bharti:
Bharti Airtel's net profits have been falling for the last 11 quarters as costs increased and a slowdown in customer additions limited revenue growth.
Global brokerage Macquarie maintained its "outperform" call on the stock with a target of Rs 425 per share. Bharti will benefits as a large incumbent, Macquarie said, adding that the stock is pricing in the regulatory burden.
Bharti's Africa business has scope for further operating leverage, the brokerage added.