Idea Cellular's shares at one-year low; are other telcos in danger too?

Before Reliance Jio launched its operations officially on September 5, many analysts and rating agencies had warned the existing telecom companies to beware of the new entrant.

Prepared to fight with the giant, the companies indulged into 4G data price war. Photo: Reuters/IANS

The last one year has not been favourable for domestic telecom players. The effect is in plain-sight if you look at their share prices.

Aditya Birla-led, Idea Cellular's shares, on Friday, touched a fresh one-year low of Rs 78.85 apiece, a drop of 45.62% since September 2015.

The company's share price on September 8, 2015, was Rs 145.85 per share, which dragged down to Rs 78.8 on Friday. In a month, the stock has lost almost 16% in value. On August 30, the shares were trading at Rs 93.45 per piece.

A similar trend was seen in the shares of Bharti Airtel, the largest telecom company in the country in terms of subscribers. In September 2015, the shares of the company were trading at Rs 347.75 apiece, while on Friday, they were at Rs 312.4, a drop of 10% in one year.

The share price of the Sunil Mittal-led company has declined by 5% in one month. On August 30, the shares of the company were trading at Rs 331.65.

Reliance Communications' shares have also taken a hit in the last one year. In September last year, the shares of the company were trading at Rs 55.75 per piece and on Friday, the stock was at Rs 43, down 22%.

At the same time, the benchmark BSE Sensex jumped nearly 10% in one year. Last year, in the same period, the 30-share Sensex was at 25,317.87, while currently, it is at 27,752.78.

Who moved telecoms' stocks?

In December last year, Reliance Industries rolled out its telecom services -- Reliance Jio -- exclusively for its employees. Reliance Jio, an ambitious project of Mukesh Ambani, was launched with the hope to fulfil Prime Minister Narendra Modi's 'Digital India' vision, Ambani said at a shareholders' meet in September.

The launch, as expected, jolted the existing telecom companies. In December 2015, the shares of Idea Cellular were trading at Rs 142. Since then, the shares have declined by 44%, giving a big blow to the investors.

The shares of Bharti Airtel were trading at Rs 334 in December, and have slumped by 6% to Rs 312.4 on Friday.

Even the share price of Anil Ambani-led Reliance Communications has taken a hit. In December 2015, the company's shares were trading at Rs 77.5. They are now trading at 44% cheaper at Rs 43.

Reliance Jio made sure to ruffle things up in the domestic telecom market with its "cheapest-ever mobile data tariffs". Even before the official launch, Jio boasted of wooing nearly 1.5 million users to its network.

The telecom companies were forewarned by many analysts and experts about the entry of the newest player in the market. To fight the giant, the telcos engaged in a 4G data price war. The last two-three months have seen most of them slashing the data prices to remain competitive.

The telcos are also engaged in a battle over 'Point of Interconnection', a matter that was taken to the Telecom Regulatory of India (Trai). After a meeting with the telcos, Idea Cellular offered additional POIs, followed by Bharti Airtel and Vodafone.

Rjio, however, maintained that the number of POIs provided by the incumbent operators was insufficient.

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