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Reliance Jio Q1 Results: Profit, ARPU Rise On The Back Of Tariff Hikes

Net profit rose 8.1% sequentially to Rs 2,520 crore in the quarter ended June.

An advertisement for Jio Platforms Ltd., the mobile network of Reliance Industries Ltd., is displayed at Marine Drive in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)
An advertisement for Jio Platforms Ltd., the mobile network of Reliance Industries Ltd., is displayed at Marine Drive in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Reliance Jio Infocomm Ltd. saw its quarterly profit rise as the delayed impact of tariff hikes and subscriber additions meant Mukesh Ambani’s telecom venture earned more from each customer.

Net profit rose 8.1% sequentially to Rs 2,520 crore in the quarter ended June, according to its exchange filing. Analysts’ estimates compiled by BloombergQuint had pegged the bottom line at Rs 2,589 crore.

  • Revenue rose 11.6% over the previous quarter to Rs 16,557 crore—higher than the Rs 15,859-crore estimate.
  • Operating profit rose 13.4% to Rs 7,005 crore.
  • Margin expanded to 42.3% from 41.6%.
  • Average revenue per user rose for the third straight quarter to Rs 140.3 per month.

Ambani’s telecom unit had raised tariffs in December, the full impact of which was seen in the subsequent quarters. Reliance Jio was also able to grow its customer base despite a nationwide lockdown to curb the spread of Covid-19. But some of the gains were offset by lower recharges by wireless subscribers during the lockdown.

The carrier also has a relatively lower contribution from international roaming charges that were severely hit for peers due to a freeze on travel. That, too, helped keep Reliance Jio’s ARPU afloat.

Reliance Jio, which houses all of Ambani’s digital ventures, is now set to build an ecosystem encompassing retail, payments, ed-tech, communications and streaming after a near three-month-long fundraising spree. The stake sales in Jio Platforms Ltd. have helped bring Silicon Valley giants like Facebook Inc., Google, Intel Corp. and Qualcomm Inc. on board—some of which may naturally find synergies with the venture.

Of the Rs 1.52 lakh crore raised, Jio Platforms will retain Rs 22,981 crore to drive growth. The rest will be used to retire debt at parent RIL.

Jio Platforms had a net profit of Rs 2,520 crore during the quarter. Operating revenue stood at Rs 17,254 crore while operating profit was at Rs 7,332 crore, according to the post-earnings presentation.

Jio has also developed a complete 5G network solution from scratch which will be ready for trials next year. That puts Ambani in the league of Ericsson, Nokia, Samsung and Huawei that are also working on building the 5G technology.

Also Read: RIL Q1 Profit Surges Due To BP Deal, Revenue Takes A Pandemic Hit

That potential, according to JP Morgan, is what investors will keep in mind while holding or buying parent Reliance Industries Ltd.’s stock. “Admittedly, given the Jio stake sales and attractiveness of Jio Platforms as a long-term technology platform, near-term earnings are of little relevance to the stock price or the holder/ buyer's investment case.”

Other Highlights

  • New subscriber additions slowed slightly during the quarter to 1.51 crore from 1.75 crore in the preceeding three months.
  • Total data consumption on network rose 11% to 1,420 crore gigabytes.
  • Total voice traffic grew 1% to 88,944 crore minutes.
  • Users used 12.1 GB data every month on average while voice usage rose to 756 minutes during the lockdown.

Shares of Jio’s parent RIL closed 0.6% higher ahead of the results, while the benchmark BSE Sensex fell 0.88%.