Telecom stocks fall up to 3% after introduction of Jio phone

New Delhi: Telecom stocks fell up to 3 percent on Friday on concerns over increased competition in the sector after RIL Chairman Mukesh Ambani announced the launch of Jio's 4G-enabled feature phone at an "effective price of Rs 0".

Shares of Idea Cellular went down by 3.11 per cent to end at Rs 91.90 while Bharti Airtel fell by 2.05 percent to Rs 411.15 on BSE.

 

Reliance Communications also slipped 0.82 percent to close at Rs 24.25.

"The pricing and launch of smartphone at effective zero cost will certainly impact and erode long term profitability of companies in telecom and cable segment," said Jimeet Modi, CEO, SAMCO Securities.

Ambani on Friday announced the launch of a 4G-enabled feature phone priced at "effective" zero that bundles life-long free voice calls with dirt cheap data in a bid to woo 50 crore low-income users to his 10-month old Jio.

Addressing the annual meeting of shareholders of Reliance Industries, the parent of Jio, Ambani said the handset, named JioPhone, will have "an effective price of Rs 0" as buyers will be able to get the device for a one-time refundable security deposit of Rs 1,500.

The deposit will be refunded after 36 months on return of the phone.

"Reliance Jio's recent announcement on its service offerings and the new phone, would continue to act as a disruptive force for the telecom industry, which is already reeling under pricing pressure in response to Jio's aggressive pricing plans," said Nitasha Shankar, Senior Vice President and Head of Research, YES Securities.