Kotak Institutional Equities has withdrawn its rating on Bharti Airtel, expressing concern about what exactly new entrant Reliance Jio is trying to achieve in the market with its relentless price cuts.

“What does Jio want,” asked analyst Rohit Chordia in his note withdrawing his rating on Bharti Airtel.

“Even as the company’s actions thus far are suggestive of a drive to domination and willingness to be as aggressive as it takes to get there, our challenge is to figure out what level of domination Jio is seeking to achieve,” the analyst said in a note to his clients.

In his note, he said investors in incumbent telecom operators like Bharti Airtel, Idea Cellular and Vodafone must ask themselves certain questions.

“(1) Is this fight even worth it anymore? (2) If yes, what is the fresh risk capital infusion needed to fight the fight? and (3) should they match Jio’s prices and risk further aggression or not match and lose subscribers?”

“They bleed in either case,” he concluded.

The analyst pointed out that Jio seems to be playing like a start-up. In start-up industries, it is not uncommon for a new player to run up massive losses in an attempt to corner a lion’s share of the market. As such, it has become difficult to predict Jio’s actions, and therefore, the fate of the others in the market, which is dependent on these actions.

“The company’s attempt to convert a traditional industry like wireless into a winner-takes-all construct has a startup feel to it that leaves us with no fair basis to value stocks like Bharti and Idea,” he said.

The analysts’ comments come in the wake of Jio slashing its 4G data price by around 50% over a period of around 15 days. While the first round of cuts was seen as an attempt to spur consumption on the network, the second round was seen as a reaction to the reaction of Bharti Airtel to the first round of cuts. Jio also reduced the minimum monthly rental for its consumers to Rs 49 from Rs 148.

Chodria said he can think of many many ways the market could evolve in the near future, depending on Jio’s appetite to burn cash, and its ultimate ambition.

The first scenario is a market where Jio is the dominant player. “Bharti is a sell in this scenario with a fair value much lower than CMP (current market price).”

The second scenario is that Jio puts Vodafone and Idea of business, and settles into a two-player market with Bharti. In such a case, Bharti’s stock price is worth far more than what the market is valuing it at present, he said.

“No longer comfortable with picking one (scenario), we move Bharti to NR (not rated),” he said.

The analyst also suggested that the incumbents should now seriously consider shutting down legacy technology like 2G, which cost more to run and therefore drag down their margins.

“This move would of course need the incumbents to rollout VOLTE on a war footing. Even if they don’t, we wonder if there is an economic case to keep the 2G networks running if the JioPhone sees even modest success.”