Telecom stocks came under intense selling pressure Thursday, under-performing benchmark indices, after Reliance Industries chairman Mukesh Ambani announced that Reliance Jio's welcome offer will be extended until 31 March 2017, raising fears of a heightening competition in the sector.
Investors cut back their positions in telecom stocks amid worries that an extended period to offer free tariff and data services by Reliance Jio could strain the balance sheets of the incumbent mobile operators.
Shares of Idea Cellular plunged 5.3 percent to Rs 73.45, Reliance Communications tumbled over 5 percent to Rs 35.75 and Bharti Airtel dropped nearly 2 percent to Rs 318.50 a share on BSE.
Meanwhile, the benchmark Sensex was down just 0.3 percent.
Market experts feel that free voice and data from Reliance Jio for an extended period of three more months could spell trouble for listed telecom entities, who are already bruised by the low voice and data tariffs.
Investors were also wary about more number of subscribers moving to Reliance Jio at a later stage, which would hurt the prospects of established players that are already reeling under huge debt.
Ambani today said the welcome offer of Reliance Jio, offering free voice, data and video services, will be available for every new customers from 4 December until 31 March 2017.
"Starting 4 December every new Jio user will get Jio's data, voice, video and full bouquet of applications free until March 31," he said.
(Disclosure: Firstpost is part of Network18, owned by Reliance Industries Limited.)