Shares of Vodafone Idea Ltd. and Bharti Airtel Ltd. surged after the wireless carrier controlled by billionaire Mukesh Ambani said it will end free voice calls on its network.
Vodafone Idea rallied as much as 18% before ending the day with a 6% gain at the highest price since August. Bharti climbed 5% to the highest level since April last year, while Reliance Industries Ltd.’s shares rose for a third day.
Reliance Jio Infocomm Ltd. will charge customers 6 paise per minute for calls made to rival networks till such time that the telecom regulator moves to a zero termination-charge regime, the company said after market on Wednesday. Jio users, however, will be compensated with free data of similar value.
The move “seems like a big deal, insofar as the market has been waiting for Jio to move from a land grabber to focusing on profitable growth,” Chris Lane, an analyst at Sanford C. Bernstein said in a note.
Reliance Jio stormed into the industry in 2016, and became the nation’s top telecom operator this year after free calls and cheap data lured millions of users and left rivals struggling under mounting debt. Vodafone Idea’s shares, for instance, are down more than 70% this year despite Thursday’s surge.
Jio has paid about 135 billion rupees ($1.9 billion) in user fees to rival operators since its launch, according to the statement. The regulator had planned to scrap these charges from January next year, but floated a fresh consultation paper to see if the date needed to be revised — a move that forced Jio to go back on its promise to keep voice calls free.