Shares of Bharti Airtel, Idea nosedived on Tuesday after TRAI (Telecom Regulatory Authority of India) slashed (IUC) (interconnection usage charge) paid by an operator for termination of mobile call on a rival network.
Shares of Bharti Airtel, Idea nosedived on Tuesday after TRAI (Telecom Regulatory Authority of India) slashed (IUC) (interconnection usage charge) paid by an operator for termination of mobile call on a rival network. The stock of India’s largest telecommunication services provider — Bharti Airtel — lost as much as 6.03% to the day’s low of Rs 371 on NSE today. Telecom Regulatory Authority of India reduced IUC to 6 paise a minute from the current 14 paise. Following the announcement the arch-rival Reliance Jio’s parent company Reliance Industries rose 4.04% to the all-time high of Rs 872.5.
Within wee hours of trading shares of Bharti Airtel recovered most of the losses and was trading 0.58% down at Rs 392.5 on NSE. Shares of Idea and Reliance Communication also regained marginally after losing 7.45% and 4% in the morning trade but were still trading lower, Idea trading down 3.67% at Rs 80.15, Reliance Communication trading down 2.24% at Rs 19.65.
The new rate will be applicable from October 1, 2017, and will be completely eliminated from January 1, 2020. The cut in the charge runs contrary to the demands made by established operators, including Bharti Airtel, which wanted the termination rate to be raised and benchmarked against the actual cost. The latest entrant Reliance Jio, on the other hand, had been seeking to waive off the charge, saying it will benefit consumers. Other prominent telecom stocks which fell after TRAI’s announcement are shares of Idea which lost 7.45% to the day’s low of Rs 77; Reliance Communication dived 4% to the day’s low of Rs 19.3.
On the TRAI’s move, Bharti Airtel today said that the company is extremely disappointed with the latest regulation on IUC. The suggested IUC rate, which has been arrived at in a completely non-transparent fashion, benefits only one operator and a sharp drop in IUC rate will only help transfer part of its cost to other operators, thereby further worsening the financial health of the industry, it added.
The equity benchmarks Sensex and Nifty 50 advanced for the third straight day with major booster coming from the market cap leader Reliance Industries. The key index of National Stock Exchange gained 13 points to open at 10,160.95 points following the record closing of all the three major Wall Street indices on Tuesday. BSE Sensex too fared in the early trade, added 64 points to open at 32,467.1 points.