Shares of Bharti Airtel and Vodafone Idea rebounded strongly on Friday after India’s telecommunications tribunal set aside a contentious ruling on predatory pricing that might have affected their market positions.
Bharti Airtel rallied by 10% to RS333 (US$4.60) and Vodafone Idea climbed 8% to Rs37.60 (52 cents) on the National Stock Exchange in early trading, before slipping back slightly later in the day.
The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) said Thursday that an earlier ruling by Telecom Regulatory Authority of India (TRAI) that changed guidelines for determining market share and rates would be set aside.
Airtel and Vodafone, both long-established operators, had contended that the TRAI ruling benefited new market entrant Reliance Jio, backed by India’s richest man Mukesh Ambani, Economic Times reported.
The TDSAT also set aside another TRAI ruling that required the leading telecommunication companies to report all tariffs in the interests of transparency and non-discrimination, which would also have disadvantaged the older market players, the daily added.
TRAI was accused by the TDSAT of abdicating its regulatory responsibilities by issuing an order that gave a new entrant like Reliance Jio pricing flexibility until it had acquired a 30% share of the market’s subscribers or revenues.
It said that if a new entrant needed to be protected from the rigours of predatory pricing, it could have promotional offers. Waiving them from standard pricing rules was an “extreme step”, the tribunal stated.
While the ruling has given older telecom players some reprieve, analysts said it had come too late: Reliance Jio has already acquired a subscriber base of over 250 million.