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    Reliance Jio Q2 net profit up 45% YoY; ARPU drops for 7th straight quarter


    Jio added a net of 24 million subscribers during the quarter to make a total of 355.2 million.

    Increased data usage helped Jio offset the impact of a continued drop in average revenue per user (Arpu).

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    Mumbai: Reliance Jio Infocomm reported its eighth profitable quarter in a row on the back of strong subscriber additions and high data usage.

    The profit rose more than 45 per cent from the year earlier but average revenue per user (ARPU), a key performance parameter, fell for the seventh successive quarter to Rs 120 from Rs 122 as the Mukesh Ambani-owned telco added more lower-revenue-generating subscribers through its 4G feature phone, the JioPhone.

    Jio's quarterly profit increased to Rs 990 crore from Rs 681 crore a year ago. The market had estimated a profit of more than Rs 1,000 crore. Profit rose 11 per cent from the preceding quarter.

    “That's okay, more customers are coming,” Jio strategy head Anshuman Thakur told reporters on Friday, referring to the ARPU decline. “At this point, we are much more focused on creating the digital ecosystem, which means getting more and more customers onto the network and ensuring that they consume more data. So, on tariffs, there is no reason to do anything different today.”

    He said the company’s move to charge for voice calls to rival networks was not a tariff action but only a “recovery of cost” for the 6 paise a minute Jio pays Vodafone Idea and Bharti Airtel as interconnect usage charges (IUC) as per rules. Jio had promised its subscribers that voice calls would be free for life.

    “In the October-December quarter, you will see a benefit on margins,” Thakur said.

    IUC, a charge paid by the call-originating telco to the destination operator, is at the heart of the latest spat between Jio and older incumbents Bharti Airtel and Vodafone Idea over the regulator’s move to seek views on deferring a zero-IUC regime, which was slated to take effect from January 2020. Jio wants the charge to go, which will help the company to lower its costs, while the older operators want it to stay, since they are net revenue gainers from IUC.

    The access charge, or IUC, that Jio pays however has been falling. In the September quarter, it fell 23 per cent to Rs 655 crore from the preceding one, building on a similar drop in the April-June period, as more calls started terminating on Jio’s network as it added subscribers at a furious pace while rivals lost users.

    Jio added a net 24 million subscribers in the quarter for a total of 355.2 million at the end of September. Monthly average data usage per user rose to 11.7 GB from 11.4 GB but voice consumption per user fell to 789 minutes per month from 821 minutes in the preceding quarter.

    Helped by higher data usage by a larger user base, operating revenue rose 5.8 per cent sequentially to Rs 12,354 crore and 33.7 per cent on year for the country’s newest telecom operator, which is playing a key role in helping parent Reliance Industries Ltd (RIL) transform itself from an oil-and-retail conglomerate to a technology platform company.

    “Jio crossed the 350 million subscriber mark to remain the world's fastest-growing digital services company and we are still adding more than 10 million new customers every month,” said Mukesh Ambani, chairman of RIL, Jio’s parent. “After tremendous success on mobile broadband connectivity business, Jio is now geared up to kick-start other growth engines–home broadband, enterprise services, small and medium business connectivity, and Internet of Things (IoT).”

    Competitors Bharti Airtel and Vodafone Idea will announce their results later this month and early November, respectively. Both are expected to post losses, but Airtel’s ARPU is expected to be higher than that of Jio.
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    2 Comments on this Story

    Shiv Sharma407 days ago
    hope mukesh ambani will have basmati rice khichri with desi ghee tadka, not khichri of mini mogra rice with wipro dalda tadka,, to save money to buy reliance share,
    Prof. Kiran S Baliyan407 days ago
    Headline is misleading. Under the present competitive conditions, Jio has done much better. Street estimate doesnt take into account rise in customers which will help in long run.
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