INSUBCONTINENT EXCLUSIVE:
MUMBAI: Reliance Jio Infocomm has reported a 62.5 per cent increase in net profit for the October-December period, helped by tariff raises
that aided its average revenue per user (ARPU) rebound from seven straight quarters of decline.
The telco, led by Mukesh Ambani, on Friday
said profit for the quarter rose to Rs 1,350 crore compared with Rs 831 crore a year ago
The market had estimated profit to be more than Rs 1,300 crore
Profit was up 36.4 per cent from the preceding quarter
It is the company’s ninth profitable quarter in a row
But charging 0.6 paise a minute for calls to rival networks cost the telco some 22 million subscribers, dragging its net additions down to
14.8 million from 24 million in the previous quarter, the company said, adding that it had cleaned up inactive, mainly voice users.
Jio’s
average monthly user data and voice consumption also fell sequentially, which Jio’s strategy head Anshuman Thakur said was mainly due to
an expanding user base, which stood at 370 million at the end of December, by far the largest in the industry.
The company said that during
the quarter, it recognised estimated statutory dues for 2010-11 to 2018-19 towards licence fee/spectrum usage charges as exceptional item,
net of tax, of around Rs 177 crore, after the Supreme Court ruling on adjusted gross revenue (AGR).
The ruling has left Jio’s rivals
Bharti Airtel and Vodafone Idea facing over Rs 35,500 crore and over Rs 53,000 crore in similar dues, respectively
Analysts say payment of such dues will financially dent both telcos – more so Vodafone Idea – and in turn benefit Jio, which is the only
profitable telco in India now.
“We are delivering on our promise to be the driver of digital revolution in the country,” said Ambani,
chairman of Reliance Industries Ltd (RIL), Jio’s parent.
ARPU, a key performance parameter, rose to Rs 128.4 from reported Rs 120 in the
fiscal second quarter, after having fallen for seven successive quarters.
Thakur said the part of the ARPU improvement was because of the
But “…it will take up to six months to actually see the higher ARPU benefit there,” Thakur said.
He added that ARPU was also helped by
the company charging from users the 6 paise a minute it pays Vodafone Idea and Bharti Airtel as interconnect usage charges (IUC).
But some
analysts were not enthused by the growth in ARPU.
“Jio's ARPU growth in the fiscal third quarter has been marginal at best despite its
decision to charge for voice calls to other networks last October, coupled with the follow-up tariff hike in December, which suggests that
it is still primarily adding low revenue-generating JioPhone users," said Rajiv Sharma, research head at SBICap Securities, said.
Monthly
average data usage per user though fell to 11.1 GB from 11.7 GB while voice consumption per user dipped to 760 minutes per month from 789
minutes in the preceding quarter.
“We are still seeing healthy growth but now base is so much larger
Per user, you may not see number, but growth is coming in through new customers,” Thakur said.
He added that going forward, there will be
some impact of price hikes, but “it will not be material”.
Sharma said that Jio's lower subscriber growth in the December quarter was
largely a fallout of its October 2019 decision to charge for voice calls to other networks to recover IUC
Jio had promised its subscribers that voice calls would be free for life.
“But we expect a course correction on this score in coming
quarters for Jio since all big three telcos have subsequently raised tariffs in December," he said.
Helped by subscriber additions, data
consumption and access revenue, operating revenue rose 28.3 per cent year-on-year to Rs 13,969 crore and 6.4 per cent quarter-on-quarter for
the country’s newest telecom operator.
“Revenue beat is largely on account of change in definition of revenue to include IUC revenue,”
Edelweiss said in a report.
In a separate report, ICICI Securities said Jio “likely has restated previous numbers, and has included
termination revenue in top line versus earlier reported net access charges”.
“The company, during the quarter, has started recovering
termination charges from subscribers for voice calls to other operators, accordingly the access charges have been presented on a gross basis
for all the periods presented,” Jio said.
Starting to charge IUC for calls to rival networks has helped turn the calling traffic flow to
53 per cent inbound and 47 per cent outbound, from 38 per cent inbound and 62 per cent outbound, the company said.
The country’s telecom
regulator has deferred implementing a zero-IUC regime to January 2021
It was slated to take effect from January 2020.
Jio’s EBITDA for the quarter grew nearly 38.2 per cent year-on-year and over 8.4 per cent
sequentially to Rs 5,601 crore
ICICI Securities said it had expected an EBITDA of Rs 5,800 crore.
EBITDA margin expanded to 40.1 per cent from 39.3 per cent in the
preceding quarter, the company said.
Capex for the quarter was Rs 3,000 crore compared with Rs 5,000 crore in the previous quarter.