Reliance JIO gets better on profitability but looses out on customer base.

Tariff hike seems a major reason behind better profitability. Average revenue per user (ARPU) rose by 10.6 % to ₹ 167.6 but the customer / subscriber base was narrowed down by 10.8 million in the fourth quarter.

May 07, 2022 08:00 am

Reliance Industries’ subsidiary Reliance Jio posted an in-line performance in the fourth quarter of FY22 with a net profit at Rs 4,173 crore compared to Rs 3,615 crore in Q3. Revenues jumped to Rs 20,901 crore from 19,347 crore in the last quarter. In terms of profitability, the telecom giant crossed key landmarks with EBITDA over Rs 10,000 crore while margin surpassed the 50-percent mark.

Reliance Jio’s average revenue per user (ARPU) beat estimates with a healthy 10.6 percent QoQ growth at Rs 167.6. Tariff hike of 20 percent has kicked in for profitability improvement for the company. Better subscriber mix has also aided in the ARPU performance.

Subscriber base for Jio continued to shrink ending at 410.2 million at the end of March, 2022 from 440.6 million at the end of the first quarter of the fiscal. Management said, “SIM consolidation post tariff hike resulting in net subscriber reduction.” Jio also highlighted, “Recent trends indicate that SIM consolidation is abating as tariff hike impact is absorbed.”

Customer engagement grew for the telecom service provider with data traffic growth of 47.5 percent YoY to 24.6 Exabytes during the fourth quarter. Per capita data grew at 48.1 percent to 19.7 GB compared to last fiscal. Average voice calls grew 17.6 percent on a year-on-year basis to 968 minutes per month.

“JioFiber has captured the largest broadband service provider position within two years of its launch,” said the management. JioFiber clocks in a total of 6 million connected premises with an average five hours of daily endgame to on the set-top-box.

Tariff hike in the telecom sector has provided the much needed boost to Jio’s performance but the decline on the subscriber front has been a concern for the analysts. However, management’s positive commentary on abating of subscriber reduction with tariff hike being absorbed is expected to allay concerns on this front.