Telecommunications shares rise due to rate hikes
Mumbai Telecom Shares rose up to 20% in the first operations on Monday and closed with gains of up to 14% after the three private providers of telecommunications services increased rates to strengthen weakened financial situations. Vodafone idea closed 14% up at Rs 7.79 with the intraday high at Rs 8.69 while Bharti Airtel gained almost 4% to close at Rs 459 while the maximum of the day was at Rs 486. Reliance Industries, the proxy for Jio , recovered to its historical maximum of Rs 1,614 and closed at Rs 1,586, more than 2%.
The three telecommunications players have increased rates by up to 40%, compared to the expectation of a 30% increase by analysts before the new rates were announced.
In the third week of November, the three major telecom service providers had announced hiking tariffs. One of the major factors behind the decision, that came after almost three years, was a recent Supreme Court order that asked all telecom service providers except Jio, to pay about Rs 1.7 lakh crore in late payment fees. After that decision, stock prices of Vodafone Idea and Bharti Airtel had dipped sharply. Since that low, Vodafone idea stock has rallied about 3.5x.