Telecom stocks were under pressure on Tuesday following Reliance Jio announcements. While Bharti Airtel fell as much as 6.6 percent in intraday-deals, Vodafone Idea tanked 10 percent after Mukesh Ambani chalked Jio's future plans at the AGM.

Ambani talked about getting in financial and strategic investors in a few quarters now and a listing in the next five years. The subscriber base has hit 340 million and the company believes that 500 million is well within its grasp.

Impact on Bharti is on account of two factors. One is Reliance Jio’s broadband foray and secondly, its focus on post-paid subscribers.

In its annual general meeting (AGM), Reliance Jio announced the commercial launch of its broadband business on September 5, pricing at Rs 700 per month going upto Rs 10,000 per month. Though the base price of Rs 700 per month has not seen very disruptive, the street is clearly worried.

According to analysts, the launch of Jio Fiber could have a negative impact on your cable, your direct to home (DTH) operators at least due to the better content partnership that Reliance Jio has had.

The analysts have analysed the contribution of Bharti’s DTH as well as the broadband businesses to the consolidated revenues. About 8 percent of Bharti’s consolidated revenues come in on account of the broadband and the DTH business and it contributes roughly about 10 percent of the EBITDA.

Jio also announced its focus on post-paid subscribers. Jio’s post-paid subscription addition has been much slower despite it being priced quite attractively and now what Jio is trying to do is target the post-paid subscribers by bundling it with the broadband services.

Post-paid prices are more expensive and for Bharti Airtel, although post-paid subscribers contribute only 5 percent to its overall subscriber base, its contribution to the revenue and EBITDA is seen much higher by analysts at close to about 20 percent. That is the reason why possibly Airtel is under severe pressure today.

Disclosure: RIL, the promoter of Reliance Jio, also controls Network18, the parent company of CNBCTV18.com.

First Published:Aug 13, 2019 12:30 PM IST