Bharti Airtel stock falls after Railways picks Reliance Jio as new service provider

Bharti Airtel stock falls after Railways picks Reliance Jio as new service provider

The Bharti Airtel stock fell in early trade after Indian Railways chose its rival Reliance Jio Infocomm as new service provider to make savings on phone bills. The stock fell up to 3.09% to 321.50 points in early trade compared to its previous close of 331.75 on the BSE. At 10:01 am, the stock was trading 1.87% lower to 325.55.It was the top Sensex loser in trade today.

The stock has fallen 35% during the last one year and lost 38.76% since the beginning of this year.

23 of 30 brokerages rate the stock “buy” or ‘outperform’, five “hold” and two “underperform”, according to analysts’ recommendations tracked by Reuters.

The stock is trading above its 50-day moving average of 300.10 and below its 200-day moving average of 353.46.

Indian Railways has been using the services of Airtel for over six years as its telecom provider for 1.95 lakh mobile phone connections used by its employees in closed user group (CUG) across the country for which the railways paid around Rs 100 crore bill per year, officials said.

The validity of these services will expire on December 31 this year.

The move to induct Reliance Jio as a service partner is likely to slash the national transporter’s phone bills by around 35 per cent at least.

“While Airtel is serving around 1.95 lakh railway subscribers, Jio will serve 3.78 lakh personnel of the railways, and because of the increase in the numbers, we are getting a better deal from the service provider. As a result of this, we are likely to reduce our phone bill by around 35 per cent,” a senior official said.

A Railway Board order issued on November 20 said it “had assigned the responsibility to RailTel (railway PSU) for finalisation of fresh CUG scheme for Indian Railways as the validity of the existing scheme is expiring on December 31, 2018. Fresh CUG scheme had since been finalised by RailTel and Reliance Jio Infocomm Limited has been awarded the contract to implement the scheme.”

“The fresh CUG will come into effect from January 1, 2019,” said the order which detailed the tariff rates to be provided by the company.

Closed User Group (CUG) is a supplementary service provided by the mobile operators to subscribers who can make and receive calls from any member associated within the group. This service is applicable for SMS too.

Under the scheme, Reliance Jio, the latest entrant in the telecom market, will provide 4G connections and calls will be free of charge.

The company will provide four packages to railways – one for its senior most officials (two percent subscribers) – a 60 GB plan with a monthly rental of Rs 125, a 45 GB plan at a monthly rental of Rs 99 for its joint secretary level officers (26 per cent subscribers), a 30 GB plan at a rental of Rs 67 for Group C staff (72 per cent subscribers) and a Rs 49 rental plan for bulk SMS.

For regular subscribers, a 25 GB plan of Jio is available for Rs 199 and subscribers have to pay Rs 20 per GB thereafter to top up their plans. Railway employees have to pay Rs 10 for 2 GB of extra data they use and more thereafter, according to the plan worked out by Jio.

While under the present scheme, railways is charged for calls outside CUG, the plan from January 1 will not do so. Also, the 3G/4G data pack in effect from next year is much cheaper than the present packs available to railways.

Last month, Reliance Jio Infocomm had emerged as the lowest bidder for the account beating Airtel and Vodafone. Sources say that while railways had demanded free calls from the bidders and got it from all of them, it was the low cost data that pushed Jio as the frontrunner.