For the July to September quarter, JPL’s consolidated net profit rose to Rs 4,729 crore from Rs 4,530 crore in the April-June period and Rs 3,728 crore in the second quarter of last fiscal year, the company said on Friday.
The profit fell short of the Rs 4,811 crore average of analyst estimates compiled by
ETwhich an analyst attributed to lower-than-expected growth in the company’s average revenue per user (Arpu).
subsidiary posted a nearly 23% increase in revenue at Rs 28,506 crore.
Reliance Jio Infocomm, the telecom unit of Jio Platforms, added 7.7 million users to its 4G network in the past quarter, taking its subscriber base to 427.6 million as on September 30. Quarterly ARPU, a key performance parameter, improved to Rs177.20 from Rs175. 70 in the fiscal first quarter, due to better seasonality and improving subscriber mix, the company said.
“We saw consistent net subscriber additions and higher engagement in digital services segment. Jio has announced beta trial for its industry-leading standalone 5G services and is making rapid progress for an ambitious and the fastest ever roll out of True 5G on pan-India basis ,” Reliance Industries chairman Mukesh Ambani said in a news release.
JPL, established in October 2019, houses Reliance Jio, the largest telecom service provider in the country, and other digital properties and investments of the group. Reliance Jio makes up the bulk of JPL’s operations. Reliance Jio reported a 28% on-year rise in net profit to Rs 4,518 crore.
The telecom business’ revenue at Rs 22,633 crore was 21% higher from a year earlier.
Average wireless data consumption per user rose to 22.2 GB a month in the quarter from 20.8 GB in the previous three months. Average voice consumption, however, fell to 969 minutes from 1,001 minutes a month sequentially.
“The mix improvement this quarter has been below Street expectations. With an additional day in the quarter, Arpu growth was expected at 1.1-1.2%,” said a Mumbai-based analyst, asking not to be named. “The per-user metrics The growth also seems to be tapering off, indicating there is no significant mix improvement. The next tranche of growth in this case would be when 5G launches in full swing. but that could be a few quarters from now.”
Mix improvement refers to the quality of subscribers within the subscriber base. Lack of mix improvement implies that fewer subscribers have upgraded their 4G plans/usage, resulting in low ARPU growth.
The analyst said over the next couple quarters, if Jio managed to get the Vodafone Idea churn to its subscriber base, the ARPU and per user usage metrics might see some improvement.
Analysts expect Vodafone Idea to lose more subscribers on account of its lag in launching 5G services, compared with rivals Jio and Bharti Airtel.
Earnings margin before interest, tax, depreciation and amortisation expanded to 49.5% from 48.7% in the June quarter, on account of lower SUC after the 5G spectrum auction in July. From a year earlier, the Ebitda margin rose 2.5 percentage points, which the company attributed to higher telecom business Arpu, which was partially offset by inflationary pressure on operating costs.
Total quarterly expenses for Reliance Jio rose 2.6% sequentially and 18% on year to Rs 16,571 crore.