Q1 Results: Price War Spares Reliance Jio’s Profit
Reliance Jio Infocomm Ltd. reported its third straight profit beating estimates as average revenue per user fell less than expected.
Net profit for the telecom firm rose almost 20 percent quarter-on-quarter to Rs 612 crore in the three months ended June. That’s higher than the Rs 551-crore consensus estimate of analysts polled by BloombergQuint.
- Operating profit rose 16.8 percent to Rs 3,147 crore.
- Operating margin expanded 101 basis points to 38.8 percent.
The average revenue generated per user narrowed for the third straight quarter to Rs 134.5, the lowest since inception. The decline was attributed largely due to waiver of Jio Prime annual membership fee and postpaid tariff cuts. But that was better than what the analysts had estimated.
The Mukesh Ambani-led telecom upstart, however, continued to gain customers, led by sales of its best-selling 4G-enabled JioPhone. Reliance Jio added 2.87 crore customers in the June quarter, its best-ever quarterly addition since launch. “The growth in subscriber base is getting further accelerated with JioPhone and attractive post-paid offerings,” it said in a statement.
Jio had announced a Rs 199 plan that offered 25 gigabytes of data per month in May this year. The scheme was 50 percent cheaper than comparable plans by rivals and is at a 60 percent discount to their average revenue per user, according to Jefferies.
Ambani will now look to extend his disruptive price war across related services as he plans to expand Jio into fibre-to-home and direct-to-home businesses. His firm also plans to roll out JioPhone 2, an upgraded version of its feature phone launched last year, from August 15. The 4G-enabled handset will support YouTube, WhatsApp and Facebook.
- Average data consumption per user in a month was at 10.6 gigabyte
- Average voice consumption per month was at 744 minutes.
- Jio reported a churn rate of 0.30 percent per month. It claims it is the lowest in the industry.