RISING USER BASE ADDS COLOUR TO JIO Q2 SHOW

Customer growth offset impact of ARPU decline

The Mukesh Ambaniowned Reliance Jio’s reported numbers for the September quarter largely in line with Street estimates. Revenues for the quarter rose 33.7 per cent year-on-year (YOY) to ~12,354 crore.

This was led by a 41 per cent growth in subscribers to 355 million. The pressure on customer realisation — measured by average revenue per user (ARPU) — however, continued. The metric came in at ~120, compared to ~121, as estimated by analysts. Profit before tax jumped 45 per cent over the year-ago quarter, to ~1,540 crore.

Ebidta for the quarter was up 44.6 per cent to ~5,166 crore, while Ebidta margins were up over 315 basis points over the year-ago quarter. While most of the costs were broadly in line with what brokerages had estimated, interconnect usage charge (IUC) reduced 37 per cent YOY (23 per cent sequentially) to ~654 crore supported by the rising market share of Jio which meant lower outgoing IUC.

The fall was much sharper than analyst estimates, which had pegged it at ~851 crore — closer to the June quarter number. "This ~652 crore is without the impact of 6 paise (introduced in Q3). It has been decreasing, we are getting bigger, and customers have been on our network for a longer time," said Anshuman Thakur, head (strategy), Jio. The IUC charge will show on the Ebitda next quarter onwards. Strong revenue growth, and lowerthan-expected expenses helped the bottom line, which rose 45.4 per cent YOY (11 per cent sequentially) to ~990 crore. This was the eighth consecutive profitable quarter for Jio.

Customer engagement improved with higher data usage of 11.7 GB per user a month, compared to 11.4 GB in Q1, the company said. However, on account of seasonality, voice usage per user a month fell to 789 minutes, against 821 minutes in Q1. While ARPU fell more than expected (down 9 per cent YOY and 1.7 per cent sequentially), the management is not very concerned, given the focus remains on market share.

“We are much more focused on creating the digital ecosystem, which means getting more and more customers onto the network,” said Thakur. Jio indicated that gross debt stood at ~84,000 crore. The high debt led to a more-than-expected 88 per cent rise in interest costs YOY to ~1,871 crore, during the quarter.