Rs 199 Reliance Jio offer impact: Bharti Airtel share price plunges, investors loss at Rs 21,800 cr

Bharti Airtel share price slipped over 3 per cent, extending losses for the sixth straight session, after rival Reliance Jio last week unveiled a new post-paid Rs 199 plan at almost half the price of the going rate and with more data than those offered by Airtel, Idea or for that matter the non-listed telco Vodafone.

Bharti Airtel stock has fallen 13.6 per cent in the last six trading sessions. By comparison, Sensex slipped just 0.6 per cent. The stock hit its 52-week low of Rs 355.10 on the BSE in today's session. Bharti Airtel has lost Rs 21,800 crore market capitalistion during the same period.

Brokerage HDFC Securities though noted that Reliance Jio is hitting hard at the profit pool of incumbents, but added that the impact of RJio’s offer is already built in to some extent post the recent price correction in Bharti Airtel and Idea. 

"We build the impact of Jio’s Hello Postpaid offer and revise our TP for Bharti to Rs 460 from Rs 487 earlier and for Idea to Rs 70 from Rs 86," the brokerage said in a report dated May 10, 2018. 

Telecom industry has already consolidated into three private players market. The brokerage believes significant blow has already been absorbed by B /V/I (EBITDA down ~55% for Bharti and 67% for Idea from peak). "B/V/I are expanding their broadband footprint and have matched Jio on tariffs with modest premium," it said. 

The brokerage further pointed out that RJio too continues to burn cash. and acquisition of Rcom’s assets would further add to its debt pile. RJio also has IPO
aspirations. 

"Jio has already grabbed 50 per cent plus of the addressable market in the smartphone segment (~200mn customers (out of 350-400mn handsets). In this backdrop, we believe price increase should take place sooner than later. This should benefit all the players including RJio. We thus remain positive on both Bharti and Idea," the brokerage explained. 

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In the March quarter, Bharti Airtel posted about 78 per cent drop in its consolidated net profit at Rs 83 crore, hurt by fierce tariff war and cut in international termination charges. The Sunil Bharti Mittal-led telecom firm had registered a net profit of Rs 373 crore in the same period a year ago.

Total revenue dropped by 10.5 per cent to Rs 19,634 crore in Q4 compared to Rs 21,935 crore in the corresponding period last fiscal year.