Reliance Jio Q3 profit surges 65% YoY to Rs 831 crore
Operating revenue rose 12.4% sequentially and 51% on year to Rs 10,383 crore.
|, ET Bureau
Last Updated: Jan 17, 2019, 07.48 PM IST
MUMBAI: Reliance Jio Infocomm (Jio) reported its fifth straight profitable quarter, with a 65% on year jump in the bottom line for the October-December period, boosted by 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 Rs831 crore for the fiscal third quarter, compared with Rs 681 crore in the July-September period, and Rs 504 crore a year ago. ICICI Securities had estimated a net profit of Rs751 crore.
Backed by an addition of 27.9 million subscribers, monthly average data usage of 10.8 GB and voice consumption of 794 minutes, operating revenue rose 12.4% sequentially and 51% on year to Rs10,383 crore for the mobile phone operator, which is playing a key role in helping parent Reliance Industries transition from an oil and retail conglomerate to a technology platform company.
“We are similarly working on re-inventing the connectivity solutions market for Homes and Enterprise with our next generation FTTX services,” Mukesh Ambani, Chairman and Managing Director at Reliance Industries, said in a statement.
Jio said that its home broadband and enterprise service - JioGigaFiber – has seen strong customer interest across 1,400 cities, and the company is currently connecting homes on priority based on the requests received.
Jio was the first amongst the three telcos to announce its results for the fiscal third quarter which may not have seen tariffs fall further but continues to see the effects of rock bottom prices in the preceding quarters post Jio’s launch in 2016. According to an ET poll, Bharti Airtel and Vodafone Idea, are both likely to report sizeable losses late this month or early next, albeit on a slower pace of revenue fall.
Nitin Soni, director (corporates) at global rating agency, Fitch said "Jio has managed to race past the Rs 10K crore revenue mark at a faster clip than the older incumbent carriers due to a combination of its disruptive pricing and a stronger 4G network experience".
He added that the latest telecom entrant is on course to "catch up with Bharti Airtel on RMS (revenue market share) later this year (calendar 2019), and could even move ahead of Vodafone Idea (VIL) on this score," as the current market leader "could lose both revenue and customers in its attempts to pull off a complex network integration process".
Airtel’s RMS was at 30.9%, VIL’s at 32.8% and Jio’s at 26.1%, as per regulator’s data at September end. Jio’s subscriber churn stood at 0.61% in the just ended quarter.
The telco though has seen a fall its average revenue per user (ARPU) — a key performance parameter — to Rs130 from ₹131.7 in the last quarter, and from Rs 154 a year back as it added more lower revenue generating subscribers in the smaller towns and cities through the 4G featurephone, JioPhone. This is the fourth straight quarter when the new entrant’s ARPU has seen a dip, but it is still expected to fare better when compared with Bharti Airtel and Vodafone Idea.
At Jio, earnings before interest, tax, depreciation and amortisation (Ebitda) totalled Rs4,053 crore, up by 13.4% sequentially, and 54.2% on year. Quarterly Ebitda margin expanded to 39% from 38.7%% in the preceding one, and 38.2% a year ago, despite total expenses rising over11% sequentially, and over 49% on year to Rs 9,106 crore.
Sequentially, network operating costs rose 22.5%, license fees and spectrum charges were up 15.6%, finance costs gained 9.5%, while depreciation and amortisation expenses rose 10%.
Earlier in the month, the carrier filed a scheme of arrangement in the National Company Law Tribunal (NCLT) bench in Ahmedabad to demerge its optic fibre cable assets on a going concern basis to Jio Digital Fibre Pvt. Ltd., and transfer on a slump sale basis of its tower assets on a going concern basis to Reliance Jio Infratel Pvt. Ltd.
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