New Delhi: Reliance Communications, India's third-biggest mobile phone carrier, raised call prices by a quarter in four service zones and said it will extend the hike to all zones in the next 30 days, sending its shares to a two-month high.
Reliance Communications increased the base call price to 1.5 paisa a second from 1.2 paisa, the company said in a statement on Friday, citing rising costs and lower competition.
A court order to revoke permits of several smaller rivals will significantly reduce competition in the cut-throat Indian market, giving operators such as Bharti Airtel and Vodafone's local unit room to raise call prices.
"We have seen on ground competition tapering off. Hence we need to restore back the price," Gurdeep Singh, chief executive of Reliance Communications' mobile business, told Reuters.
"From our experience in the four zones where we have implemented it already, this is very much sustainable. We see another round of tariff hike in the next one year," Singh said in a phone interview.
Voice calls account for about 85 per cent of Indian telecoms sector's revenue. A vicious price war in a market that once boasted 15 operators had led to sharp drops in call prices in 2009-10.
Shares in Reliance Communications were trading 3.7 per cent higher at 59.60 rupees in Mumbai at 0707 GMT. The stock earlier rose to 60.20 rupees, its highest level since July 24.
Bigger rival Bharti jumped 3.5 per cent and Idea Cellular was up 1.7 per cent on speculation that other telecom companies will follow Reliance Communications' move.
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