Vodafone Idea rallied as much as 35 percent intraday on Wednesday, extending gains for the fourth straight session. At 11:20 AM, the stock was trading at Rs 7.40, up 22.31 percent.
The stock has been rallying since CNBC-TV18 reported on November 15 that the committee of secretaries (CoS) is mulling setting a minimum price for mobile calls and data usage. The stock has gained as much as 169.5 percent, rising from Rs 2.9 on November 15 to Rs 7.4 currently.
In perspective, Rs 100 invested in the stock just four days ago, would have more than doubled to Rs 269 currently.
The cash-strapped telecom operator has fallen over 76 percent in the last one year and 73 percent in 2019.
The rally in the stock began after CNBC-TV18 reported last week that the committee of secretaries is mulling setting a minimum price for mobile calls and data. The CoS has sought recommendations from the Department of Telecom (DoT) on setting a minimum charge for all tariffs for telecom players and is also assessing the impact it will have on telecom operators.
What extended the rally was the company's recent announcement of its intent to hike mobile call and data tariffs from December. "To ensure that its customers continue to enjoy world-class digital experiences, Vodafone Idea will suitably increase the prices of its tariffs effective 1 December 2019," it said in a statement.
However, despite the proposed tariff hike, global brokerage Jefferies said that Vodafone Idea will still lose a majority of high average revenue per user (ARPU) subscribers to Bharti Airtel.
The telecom operator has been under pressure since the launch of Reliance Jio.
Vodafone Idea and Bharti Airtel reported massive losses in the second quarter, due to provisions set aside for unpaid government dues after the Supreme Court ruled in favour of the government in AGR case. Both companies have decided to increase charges for the viability of their operations.
Most analysts do not suggest foraying in the sector as of now. Nilesh Shah, managing director and CEO of Envision Capital, has advised investors to avoid telecom stocks, saying that there were no reasons to be invested in the sector.
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First Published: IST