Jio Q1 net profit up 46% on year; ARPU falls to Rs122
Increased data usage helped Jio offset the impact of a continued drop in average revenue per user (ARPU).
Increased data usage helped Jio offset the impact of a continued drop in average revenue per user (ARPU). The key performance metric fell for the sixth consecutive quarter to Rs 122 from Rs 126.1 in January-March.
ARPU declined as the Mukesh Ambani-owned telco added millions of low-revenue-generating subscribers through its 4G featurephone, JioPhone, said Anshuman Thakur, Jio’s head of strategy and planning.
“If everyone moves to a 12-month plan, we will be thrilled, but ARPU will come down. If everyone comes down to a 28-day plan we will not be so happy but ARPU will be up,” said Thakur. “If the market is growing more and people are liking JioPhone, then more subscribers come, ARPU will go down. But we are fine because we are getting more subscribers and revenues are increasing as customers are consuming more data.”
He said Jio does not include interconnect usage charges (IUC) in its ARPU calculation. IUC is paid to the telco that receives a call.
“Our ARPU does not recognise IUC. Other operators have a component of IUC. So, it is not like to like. If we include IUC in our number, it will be significantly higher and if we remove IUC from their ARPU, it will come down drastically. We are not in the ARPU game,” said Thakur.
The company’s profit increased to Rs 891 crore in the quarter ended June from Rs 612 crore a year ago. The markets had estimated Jio would ring in a profit of about Rs 800 crore. Earnings rose 6.1% from the previous quarter.
Jio added a net 24.5 million subscribers in the quarter for a total of 331.3 million. Monthly average data usage per user rose to 11.4 GB from 10.9 GB while voice consumption per user fell to 821 minutes per month from 823 minutes in the previous quarter.
Helped by higher data usage, operating revenue rose 5.2% sequentially to Rs 11,679 crore and 44% on year for the country’s 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.
“In less than two years of commercial operations, Jio network carried almost 11exabytes of data traffic during the recently concluded fiscal quarter,” Ambani, chairman of Jio’s parent company Reliance Industries, said in a statement Friday. “Jio has started connecting enterprises with its next-gen connectivity solutions on the back of its extensive fiber network across the country.”
Trials of JioGigaFiber, the home broadband service, have been “very successful” and the entire bouquet of smart home solutions will be rolled out to the targeted 50 million households and beyond, Ambani said.
“A combination of strong net customer adds and record low churn has largely helped Jio to report decent growth in profit and revenue in the June quarter, despite its falling ARPU,” said Rohan Dhamija, partner and head of India & Middle East at Analysys Mason. Churn, or the percentage of customers leaving Jio’s network, was 0.97%, the lowest in the industry, the company said.
Ebitda (earnings before interest, tax, depreciation and amortisation) margin expanded 110 basis points on quarter to 40.1%, helped by “robust operational efficiency,” Jio said.
The company had debt of Rs 75,000 crore at the end of June and recorded capital expenditure of about Rs 8,500 crore in the quarter. Total expenses rose 5.2% on quarter and 36% on-year to Rs 10,326 crore, driven by a rise in network operations, finance and depreciation and amortisation costs, the company said.