The Department of Telecommunications (DoT) has estimated that an increase of 10% in realizations from subscribers — by raising phone bills — may yield about Rs 35,000 crore in revenue for the sector over three years without affecting consumer demand while helping companies regain financial viability.
Telecom stocks rallied on Thursday on hopes that Reliance Jio Infocomm Ltd’s unconventional tariff move may enable other operators to raise tariffs too. Reliance Jio said on Wednesday that due to undergoing regulatory policy changes for Interconnect Usage Charge (IUC), it is compelled to recover IUC from non-Jio users and hence post 10 October, all calls to non-Jio mobile numbers will be charged at 6 paise per minute.
Shares of Bharti Airtel and Vodafone Idea Ltd ended 5-6% higher while Reliance Industries Ltd (RIL) was up nearly 3% on Thursday.
Analysts believe the tariff hike from the price-setter is positive for the telecom industry and will provide other operators leeway to raise their charges proportionately. However, analysts were cautious that the way the price increase has been taken is perplexing considering it may cause inconvenience and anxiety to subscribers.