Bharti Airtel hits 52-wk high, Voda Idea up 20% on decision to hike tariffs

Stocks of telecom operators Bharti Airtel and Vodafone Idea surged in Tuesday's early morning trade after the two firms announced they will hike tariffs, starting December 1. While Airtel's shares climbed 5 per cent to Rs 430.80 apiece to log a fresh 52-week high, Vodafone Idea zoomed 20 per cent to Rs 5.35 on the BSE.

The telcos, however, did not provide any guidance on the amount of the hike or the subscriber segments to be impacted by the move. 
 

Bruised by fierce competition to keep prices low, the tariff hike announced by the two companies is the first in several years and follows record second-quarter losses reported by the two operators.

Led by lower costs, especially, network operating expenses, selling & marketing as well as other expenses, Bharti Airtel’s operating profit was up 41 per cent at Rs 8,928 crore in Q2FY20, which was better than the Bloomberg consensus estimate of Rs 8,388 crore. Consolidated operating profit margins, too, saw a jump from 31.5 per cent in the year-ago quarter to 42.3 per cent in Q2 even though it posted a pre-tax loss of Rs 31,334 crore due to a provision of Rs 28,450 crore for outstanding payments to the central government on account of the Supreme Court judgment on adjusted gross revenues (AGR).

Vodafone Idea reported a massive pre-tax loss of Rs 36,959 crore for the July-September quarter, against a loss of Rs 4,974 crore in the year-ago quarter while the loss in the June quarter was Rs 4,874 crore.

Analysts see the tariff hikes as a positive for the sector, which has only witnessed tariff cuts since the launch of Reliance Jio in September 2016.

Around 9:36 am, Vodafone Idea was up 19.02 per cent at Rs 5.32 on the BSE. A total of 21.8 crore shares of Vodafone had changed hands on the NSE and BSE combined. The stock has gained 106 per cent from its lifetime low of Rs 2.61, touched in the intra-day trade on Friday, November 15, on BSE.

Around the same time, Bharti Airtel was up 5.3 per cent at Rs 430.80. Over 1.4 crore Bharti Airtel shares had changed hands on the NSE and BSE. In comparison, the benchmark S&P BSE Sensex was trading 0.18 per cent higher at 40,355.