NEW DELHI: Reliance Jio Infocomm reported its third straight profitable quarter, with a 20% expansion sequentially in the bottom line for the April-June period on the back of strong user additions and increased data usage.
The Mukesh Ambani-controlled company, which has upended the market since its entry in September 2016 with cheap mobile Internet services, posted a net profit of ₹612 crore for the fiscal first quarter, compared with ₹510 crore in the January-March period.
Operating revenue rose 13.8% sequentially to ₹8,109 crore for the countrys youngest telecom operator, which is playing a key role in helping parent Reliance Industries transition from an oil and retail conglomerate to a technology platform company.
Jio's revenue surpassed that of Vodafone India which had recently posted ₹7,860 crore in the fiscal first quarter.
The results surprised analysts, considering the weak performance by rivals in a market that is reeling under pricing pressure, rising cost and a cut in international call termination rates.
"Jio has beaten estimates by clocking strong 13.8% sequential revenue growth in the June quarter, driven by a sharp jump in subscriber additions,” said Sanjesh Jain, telecom analyst at ICICI Securities.
Market leader Bharti Airtel on Thursday posted a consolidated net profit of ₹97.30 crore for the quarter, that too after taking an exceptional gain on its Africa operations. The Sunil Mittal-owned telcos revenue from India operations fell 13.5% from a year earlier to ₹14,930 crore in the past quarter.
Among the other two big operators, Vodafone Indias service revenue fell 31% in the quarter, while Idea Cellular is expected to post a wider loss, according to industry analysts.
At Jio, earnings before interest, tax, depreciation and amortisation totalled ₹3,147 crore, up by 16.8% sequentially.
“215 million customers within 22 months of start is a record that no technology company has been able to achieve anywhere in the world,” chairman Mukesh Ambani said in a company statement. Fibre-to-thehome and enterprise services that it is working on will strengthen Jios leadership as a digital service provider, he said.
The telco has seen a fall its average revenue per user (ARPU) — a key performance parameter — to ₹134.50 from Rs 137 during January-March. This is the second straight quarter when the new entrants ARPU has seen a dip, but it still fares better when compared with Bharti Airtels ₹105 for the period.
Anshuman Thakur, Jios head of strategy and planning, told reporters that the ARPU dropped because it did not charge prime customers and also gave discounts to those who recharged online.
This July, the telco continued with the loyalty programme, Prime, for another year free for existing members — it costs ₹99 for new users. The membership, started last year, was set to expire on March 31.
Meanwhile, industry experts do not see the tariff war ebbing in the industry.
“Jio has been able to maintain their ARPU levels and the marginal decline is due to low ARPU from feature phones. This would suggest that the competitive intensity and pricing pressure is likely to continue for a few more quarters,” said Pankaj Agrawal, partner at telecom and media consultancy Capital. Its quarterly Ebitda margin expanded to 38.8% compared with 37.8% in the preceding one. Airtel, in comparison, had a margin of 34%.
Jio added 28.7 million subscribers on a net basis during the three months, its highest ever in any quarter, to end June with 215.3 million users on its network.
Total wireless data traffic was 642 crore GB, about 27% more than the previous quarter. Average data consumption per user per month was 10.6 GB, while average voice traffic was 744 minutes per month.
It had debt of ₹71,000 crore at the end of June. Parent Reliance Industries joint chief financial officer, Srikanth Venkatachari, said since the wireline business was still being built, some of the interest was being capitalised.
The company recorded a capital expenditure of about ₹17,000 crore in the June quarter, compared with ₹14,000 crore in the previous quarter.
It also came out with a higher-end model of the JioPhone at ₹2,999 and launched the Monsoon Hungama offer under which consumers can exchange any old featurephone for a new JioPhone base model. It sold more than 25 million base JioPhones in one year.