Reliance Jio on Thursday posted a 64.7% jump in its net profit at Rs 840 crore for the fourth quarter ended March 2019 in spite of continued fall in average revenue per user (Arpu), a key matrix for profitability.
The telecom company had recorded a profit of Rs 510 crore in the same quarter previous year.
The operating revenues stood at Rs 11,106 crore in the January-March period, an increase of 55.8% against Rs 7,128 crore in the same period last year.
RJio, which disrupted in the sector with its entry, has over 300 million subscribers and is the only telecom operator in the country whose profits are on a rise. Rivals Airtel, Vodafone Idea and state-run telcos BSNL and MTNL are battling a constant decline in profitability.
As Jio continues to add low revenue users, its Arpu fell for the fifth straight quarter to Rs 126.2, down from Rs 131.7 in the October-December period.
The average data consumption per user per month stood at 10.9 GB while average voice consumption was 823 minutes. Video consumption drove the data usage which reached over 500 crore hours per month, the company said in a statement.
During the quarter, the total wireless data traffic was 956 crore GB and the total voice traffic was 72,414 crore minutes. It added 26.6 million users during the quarter, taking total subscriber base to 306.7 million.
For the year ended March 31, Jio over fourfold jump in its net profit to Rs 2,964 crore compared to Rs 723 crore in the previous fiscal. The operating revenue of Reliance Jio jumped 92.7% to Rs 38,838 crore for 2018-19, as against Rs 20,154 crore in 2017-18.
“Growth in data and voice traffic at this scale has been unparalleled. Jio's network is one of the largest mobile data networks in the world carrying over three exabytes of data every month at unmatched download speeds," Reliance Industries chairman and managing director Mukesh D Ambani said in a statement.
It has rolled out fixed line broadband connection 'JioGigaFiber services' across 1,600 cities. "Post completion of the acquisitions of Den Networks Ltd and Hathway Cable and Datacom Ltd (now majority owned by RIL Group after the open offer process completed in last quarter of 2018-19), the go-to-market strategy is being optimised with successful test results from beta trials across the country," the statement said.
The transfer of fibre and tower assets to separate companies - Digital Fibre Infrastructure Trust and Power Infrastructure Trust - has resulted in reduction of liabilities worth Rs 1,07,000 crore during the quarter.
"After successful execution of mobility business, Jio is now focused on catapulting India's underserved home and enterprise connectivity market to global standards with its next-generation FTTX services. Jio mobility services along with Gigafiber fixed-broadband services and associated technology platforms have been designed to transform India with the power of digital revolution and reinvent Reliance as a technology platform company,” Ambani said.
In a report on Tuesday, Edelweiss Research said price hikes are imminent as Jio approaches its 400 million subscriber goalpost.
A pricing recovery is expected from the second half of the financial year 2019-20, propelling industry Arpu to pre-Jio level of Rs 156 by the end of 2021-22, in turn, catapulting industry size 50%. Arpu stood at Rs 98 in the third quarter of 2018-19.
Also, mobile broadband subscriber penetration is close to reaching 65%, which provides for an opportune time to raise tariffs.
The aggressive pricing unleashed by Jio with its entry has impacted the financials of incumbents. There has been hardly any price raise since then, leaving no scope for telcos to recover their investments. Jio also forced consolidation in the sector, where only three private players have left – Reliance Jio, Airtel, Vodafone Idea. State-run telecom firms BSNL and MTNL are also struggling to sustain themselves in a highly competitive market.
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