Brokerages have provided positive insights on the telecom sector following recent tariff hikes by Reliance Jio. CLSA notes the increase of 13-25 per cent in tariffs, keeping JioPhone plans unchanged. Jio’s tariffs now have a 15-21 per cent premium over Bharti Airtel and Vodafone Idea (VI), shifting the historical trend where Bharti and VI had higher tariffs than Jio. The key focus is whether Bharti and VI will follow suit with tariff hikes.
Bernstein anticipates Bharti Airtel and VI will follow Jio’s lead, with expected hikes of 20-25 per cent across plans. This aligns with expectations on the timing and magnitude of the increase.
Citi underscores the positive implications of Jio’s tariff hike, which include the significant magnitude of the increase, Jio’s leadership signalling a reduction in competitive intensity, and steps towards indirect monetisation of 5G.
Jefferies emphasises that Jio’s willingness to raise tariffs is favourable for both Jio and Bharti Airtel’s revenue and margin outlook. They maintain a Buy rating on Bharti Airtel with a target price of Rs 1,720.