Stocks of telecom firms on Thursday were hit by severe selling pressure after Reliance Industries unveiled plans to offer free local voice calls on its new mobile network, RJio. Shares of the telecom companies fell sharply by up to 11% in intra-day trade, which wiped out Rs 16,997 crore from their market valuation.
Announcing the launch tariffs, Ambani said, “We start from Rs 19 per day data plan for the occasional data user. Then there is a Rs 149 monthly plan for the light data user. The data plan for the heaviest user goes up to Rs 4,999 per month.”
The stock of Idea Cellular fell to a 52-week low of Rs 83.20 to close at Rs 83.70, down around 10%, making it the worst performer in the BSE Telecom Index. This was followed by Reliance Communication and Bharti Airtel whose shares were down 8.81% and 6.37% to close at Rs 49.15 and Rs 310.70.
Shares of Tata Teleservices, Bharti Infratel, Tata Communications and Himachal Futuristic Communications fell between 1% and 3%. At the other end of the spectrum, GTL Infrastructure, GTL, Mahanagar Telephone Nigam (MTNL) and OnMobile were among the gainers as their shares were up between 1% and 20%. The Sensex closed at 28,423.48 ,down 0.10% and the BSE Telecom Index closed at 1156.58, down 5.67%.
Even before its launch, Reliance Jio has sent jitters in the telecom industry, with its peers like Bharti Airtel, Vodafone and Idea Cellular aggressively offering freebies and discounts to woo new customers and retain existing ones.
Analysts at India Infoline said that, “Jio has given unlimited data use for three months to users. This has brought in 1.5m users with average usage reported to be more than 25GB/user/month, which means it is carrying more traffic than even Idea Cellular. Admittedly, this is due to users not having to pay, and Jio is incurring opex.”