Reliance Jio Q3 Results: Operating Profit Misses Estimates Even As ARPU Rises
Reliance Jio Infocomm Ltd.’s operating profit missed estimates in the quarter ended December as it added fewer subscribers than expected.
Operating profit of the billionaire Mukesh Ambani-owned telecom venture rose 8.64 percent sequentially to Rs 5,583 crore in the October-December period, according to a company statement. That compares with the Rs 5,978-crore consensus of analyst estimates compiled by BloombergQuint.
Net profit of India’s largest operator by subscribers jumped 36.36 percent over the preceding quarter to Rs 1,350 crore. That’s against the Rs 1,419-crore estimate.
Revenue of the telecom operator rose 6.4 percent sequentially to Rs 13,968 crore in the third quarter, compared with the Rs 13,722-crore estimate. Reliance Jio restated its second quarter revenue to Rs 13,130 crore from Rs 12,354 crore earlier.
Reliance Jio’s average revenue per user rose to Rs 128 from Rs 120 in the quarter ended September. It’s also the first rise since Reliance Jio started reporting financial results. That came mostly on the back of tariff hikes and new plans bundled with the interconnect usage charges for voice calls.
Adjusted for the IUC, Anshuman Thakur, head of strategy at Reliance Jio, said ARPU in the second quarter stood at Rs 127.5.
Last week, Reliance Jio launched voice and video-calling over WiFi service that will allow customers to switch seamlessly from LTE to WiFi-based calling when they are at home or office. The announcement came less than a month after rival Bharti Airtel Ltd. launched a similar service in Delhi-National Capital Region.
Reliance Jio’s margin, however, contracted 163 basis points over the last quarter to 39.97 percent in the three months ended December.
In November, India’s youngest telecom operator lost active customers for the first time since it began operations three years ago. That was largely on the back of Reliance Jio’s decision to start charging customers for voice calls. In the quarter ended December, Reliance Jio added 1.48 crore subscribers, against 2.2 crore estimated by a consensus of analysts.
“As we move to new tariff plans and charging for IUC, we saw a lot of people who were marginal subscribers just using heavy voice slowly go out of the network”, Alok Agarwal, chief financial officer of Reliance Industries Ltd., parent of Reliance Jio, said in a statement.
Avinash Gorakshakar, director of research at brokerage Profitmart Securities, told BloombergQuint that incremental additions will happen at a slower pace than the street’s expectation at least for the next one or two months.
Shares of Reliance Industries closed 2.79 percent higher ahead of the earnings announcement compared with a flat Nifty 50 Index.