IUC cut to dent margins of Bharti and Idea; bonanza for RJio, say analysts

Telecom stocks continue to trade mixed in noon deals with Bharti Airtel hovering at Rs 396 levels, up 0.4% and Idea Cellular down over 3% at Rs 80 levels. Both these stocks slipped up to 7% after the Telecom Regulatory Authority of India (Trai) cut termination charge for all mobile to mobile calls to 6 paise per minute from 14 paise effective October 1.

In addition, the telecom regulator has also said that the charges would come down to zero by the year 2020, meaning there won’t be any payment for calls landing on other telcos’ networks.

The move, analysts believe, will negatively impact margins of the incumbent telecom companies- Bharti Airtel and Idea Cellular. Reliance Jio, on the other hand, will stand to gain. They also believe that the ultimate beneficiary of the move will be the consumer that could end up paying less for voice calls. Since the usage is moving more towards data, with interconnect charges seeing a steep cut and sharp growth in data uptake, incumbents will introduce more (data and voice) bundled plans going ahead.

Here is a quick compilation of how leading brokerages and research houses have reacted to the development.

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