Reliance Jio’s Regulatory Expenses Jump On Higher Users, Charges
Reliance Jio pays more for spectrum access and cross-operator calls as users grow.
A growing user base and charges paid for spectrum and cross-network calls pushed up regulatory expenses for Reliance Jio Infocomm Ltd.
The Mukesh Ambani-led telecom operator’s gross revenue stood at Rs 1,150 crore in the quarter ended June, which includes both consumer spend and revenue from interconnect usage charges. Adjusted gross revenue was a negative Rs 1,000 crore. Which means, Reliance Jio spent Rs 2,150 crore on access and other charges, 43 percent higher than the previous three months, quarterly data released by the Telecom Regulatory Authority of India show.
Reliance Jio’s total user base increased to 12.3 crore as of June end from 10.8 crore on March 31. The company offers some of the lowest data tariffs and highest discounts since it started charging subscribers from April after six months of free services.
More users mean Reliance Jio will have to pay higher interconnection call charges related to cross-operator calls. For example, Reliance Jio pays a fee for every call its subscriber makes to a Bharti Airtel Ltd. user, and vice versa.
Which means, older operators with more subscribers and bigger networks tend to receive more calls and thus make money from the charge. A smaller rival like Reliance Jio that offers free voice calls becomes a net payer. Reliance Jio has been pitching for no or low interconnection call charges.
The telecom operator is yet to recognise its revenue, an accounting practice that will offer more insight into its profitability.
Overall, the telecom industry’s adjusted gross revenue fell 4.7 percent to Rs 28,300 crore in the June-ended quarter over the previous three months, burdened by higher access charges paid between operators, the TRAI data showed. That indicates consumer spend on telecom has declined, thanks to the ongoing discount war.
Vodafone India’s adjusted gross revenue rose fell by 2.3 percent sequentially to Rs 7100 crore. Bharti Airtel and Idea Cellular saw a decline of 4.6 percent and 3.8 percent to Rs 9,900 crore and Rs 6,200 crore, respectively.
The adjusted gross revenue of the industry is likely to rise from the quarter ended December onward on a low base and improvement in Reliance Jio’s revenue, a note by brokerage ICICI Securities said.