Telecom stocks in demand

Shares of two telecom firms advanced after rival Reliance Jio Infocomm started charging for voice calls made to subscribers of other telcos.

Shares of Vodafone Idea rose 3.60% to Rs 6.05, while shares of Bharti Airtel rose 4.57% to Rs 375.65.

Shares of Bharti Airtel surged 10% in two trading sessions, from a recent closing low of Rs 341.50 on 7 October 2019.

Shares of Vodafone Idea climbed 18.16% in two trading sessions, from a recent closing low of Rs 5.12 on 7 October 2019.

Telecom shares surged amid hopes that the price hike could possibly herald an end in India's bruising telecom price war unleashed by the entry of Reliance Jio.

Reliance Industries was up 2.21% at Rs 1355.

Forced by regulatory uncertainty, Mukesh Ambani's unlisted telecom firm Reliance Jio Infocomm on Wednesday announced that it will charge customers 6 paise per minute for voice calls made to rival phone networks, but will compensate them by giving free data of equal value.

Interconnect Usage Charge or IUC is a cost paid by one mobile telecom operator to another, when its customers make outgoing mobile calls to the other operator's customers. These calls between two different networks are known as mobile off-net calls. IUC charges are fixed by Telecom Regulatory Authority of India (TRAI) and are currently at 6 paise per minute.

Jio continued to pay IUC from its own resources to Airtel and Vodafone-Idea etc. while offering free voice to its customers. So far, in the last three years Jio has paid nearly Rs 13,500 crore as net IUC charges to the other operators.

Nevertheless, Jio said there will be 'no' 6 paise per minute charge on all Jio-to-Jio calls; all incoming calls; Jio to landline calls; and calls made using WhatsApp or FaceTime and similar platforms. Additionally, Jio, with Reliance Retail, will ensure priority allocation of the JioPhone to frequently called 2G users from Jio consumers.

Jio will provide additional data entitlement of equivalent value based on IUC top-up voucher consumption. Consumers can continue to enjoy the additional data entitlement in lieu of the IUC top-up vouchers so that there is no effective tariff increase till 31 December 2019, Jio said.

Jio assured that the IUC charge shall continue only till the time TRAI abolishes IUC, in line with its present regulation.

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