Telecom operator Reliance Jio’s net profit grew just 1% sequentially to Rs 6,711 crore in the June quarter, on the back of rising interest costs. The moderation in profit growth came despite a strong operating performance, led by subscriber additions and cost efficiencies, analysts said.
The subdued bottomline was largely due to the capitalisation of 5G spectrum investments.
“Net profit growth was restricted due to a jump in D&A and interest cost with capitalisation of 5G capex,” analysts from ICICI Securities said.
Interest expenses jumped quarter-on-quarter to Rs 2,081 crore. “Interest cost saw sharp 55% q-o-q jump as Jio started operationalisation of 5G spectrum assets,” IIFL analysts noted.
Revenue and ARPU miss estimates
Operating revenue grew 2.9% sequentially to Rs 30,882 crore, supported by a 2% increase in subscribers and a 1.2% rise in average revenue per user (Arpu) to Rs 208.8.
However, growth was helped by one extra day in the quarter. “Arpu at Rs 209 (rounded off) rose 15% y-o-y but missed our estimate. Adjusted for one extra day, Jio’s Arpu was flat q-o-q” analysts from Jefferies said.
This, analysts said, is due to the effect of tariff hikes wearing off, though there may be some growth in Q2 as longer term plans come up for renewal in the current quarter.
Ebitda rose 3.1% q-o-q to Rs 16,690 crore, with margins improving by 124 basis points to 54%.
“Q1FY26 was marked by a jump in Ebitda margin by 124 bps q-o-q with incremental Ebitda margin at 97%,” analysts from ICICI Securities said.
Data consumption and home broadband
Data usage continued to surge on Jio network during the April-June quarter.
The per capita data usage rose to 37 GB per month as compared to 33.6 GB per month in the previous quarter, while overall data usage grew to 54 billion GB during the quarter.
“Data usage was up 24% y-o-y to 54,700 billion MB…aided by home subs that use higher data quantity… and IPL season,” ICICI Securities analysts noted.
On an average, a home connection uses between 100-150 GB of data in a month and growth in the connected home via FWA base expansion would have contributed to the spike in overall and per capita usage.
Subscriber additions continued to be robust. Jio’s connectivity subscribers were up 9.9 million. This included 7.3 million mobile users and 2.6 million home broadband subscribers. The telco added 1.8 million FWA subscribers in Q1, taking its total FWA subs to 7.4mn for the quarter.
Jio is increasingly using Unlicensed Band Radio (UBR) for its home broadband push. “Over 1 million home connections are already enabled via UBR,” UBS analysts said in a report.