Telecom stocks in demand, surge up to 8 per cent

New Delhi: Telecom stocks on Monday surged up to a 8 per cent after the recent increase in Reliance Jio tariffs, which is largely seen as positive for the sector. Shares of Bharti Airtel jumped 4.99 per cent to close at Rs 497.50 on BSE.

Bharti Airtel was the biggest gainer among the 30-share index components. The scrip of Idea Cellular soared 7.74 per cent to end at Rs 98.15 and Reliance Communications zoomed 7.60 per cent to Rs 17.70.

Reliance Jio made its service dearer by about 15 per cent for its popular 84-day plan at Rs 459 from October 19, under which subscribers get 1GB 4G data at high speed per day. The company restructured its various schemes by reducing their validity period.

The recent increase in Reliance Jio tariffs will increase its average revenue per user by up to 20 per cent and is a positive for the telecom sector, which is seeing a rapid consolidation, says a Philip Capital report. Established telecom sector players have seen huge reduction in their margins.

Idea Cellular and Reliance Communications first time reported consolidated loss mainly on account of free services launched by Jio.

"The Indian telecom industry is seeing huge amount of consolidation and with decreasing choices for the subscribers the operators will compete on quality of service over the medium to long-term. This could mean sustained increase in ARPU over the medium to long-term. We are highly optimistic on the prospects of the Indian telecom industry," the report said. ARPU is average revenue per user.