Pricing power set for comeback in telecom sector?

NEW DELHI : Following in the footsteps of Vodafone Idea and Bharti Airtel, which will hike the mobile tariffs on 1 December, Reliance Jio too on Tuesday said it would hike tariffs in ‘next few weeks’. While this could mark the long-awaited beginning of price recovery for telecom companies, the extent of gains could be decided by the quantum of hike and government relief.

Is the hike sustainable?

According to equity research analysts at Jefferies Financial Group, “The tariff hikes are positive, in our view, and come five months ahead of our expectation. However, the move does not materially change our price targets, unless the hike is significantly above 20%. Our estimates currently factor in a 20% hike in early FY21.”