Jio does it again as new deal sends shares tumbling

Reliance Jio has unveiled a new postpaid tariff to further undercut rivals plans and reinvigorate the enthusiasm which saw millions of customers flock to the telco.

The new deal is priced at Rs 199 per month offering 25 GB data, while all phone calls and texts are also included. It is pretty much as low as you can get but still make money (questionable as to how much though), with the added bonus of tumbling share prices for all its competitors.

Over the last 24 hours, shares in Bharti Airtel dropped almost 6%, Idea Cellular was down 14% and Reliance Communication was down 5%. Vodafone’s share price is unlikely to be drastically influenced by one market, but the management team will be wondering when the misery is going to end.

The last few months have been a bit quieter in India, which must have come as a welcome rest for the traditional players. Jio’s entry caused chaos in a stagnant market, with the spreadsheets starting to pick up some weighty bumps and bruises. A period of calm might have helped out the likes of Bharti Airtel or Idea, however the launch of this new tariff is the starting bell for another round.

It would hardly be a surprise to see customers tearing up contracts and flocking to the open arms of Reliance Jio. It might not be the free services which were being offered last year, however this tariff can cause some damage. There is one reason share prices are plummeting all over the place, the market knows that the competitors are going to have to match the Jio offer. That means more pressure on profit columns which are already being squeezed pretty tight.

Some might have though the chaos was over and the market could return to calm, but Jio is making sure the party train keeps rolling.

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