Why Mukesh Ambani is not worried about falling ARPU; it may be a part of his plan all along

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Updated: April 28, 2018 5:25:31 PM

Reliance Jio Q4 results: While there has been a 11% drop in ARPU, billionaire Mukesh Ambani-led company has reported a strong subscriber growth trend with net addition during the quarter at 26.5 million.

“The strong financial results of Jio in a competitive market environment demonstrates the robustness of the Jio business model and ability to offer the most value to our customers and partners,” Ambani said.

Billionaire Mukesh Ambani-led Reliance Industries telecom venture Reliance Jio Infocomm has reported a 11% drop in average revenue per user (ARPU) in the latest quarter mainly triggered by a  sharp cut in its base offer to JioPhone users at Rs 49/month, and users moving to lower priced bundled plans. The ARPU has fallen 11% to Rs 137.1 from a high of Rs 154 in the previous quarter. However, the fall in the ARPUs come amid Jio’s strong subscriber growth trend with net addition during the quarter at 26.5 million (as against 21.5 million in the previous quarter). Notably, Reliance Jio also has the lowest churn, at 1.4 million implying the lowest industry churn rate at 0.25% per month.

“Jio subscribers continue to demonstrate high activity level with average data consumption per user per month of 9.7 GB and average voice consumption of 716 minutes per user per month,” the company said in a press release yesterday.

The company’s aggressive pricing has put pressure on other players in the industry. In the fourth quarter results for 2017/18, Bharti Airtel has reported 10 per cent sequential drop in revenues to Rs 19,634.3 crore and 78 per cent fall in net profits to Rs 82.9 crore. Aditya Birla Group company Idea Cellular reported a three-fold jump in its comprehensive loss at Rs 930.6 crore for the fourth quarter of 2017-18 compared to Rs 325.6 crore a year ago.

In comparison, Jio has posted a profit of Rs 510 crore, up 1.2% on-quarter from Rs 504 crore in the October-December quarter. Buoyed by the robust addition to its subscriber base, Reliance Jio has also posted a solid revenue from operations at Rs 7,128 crore. However, as the revenues have increase by 3%, but the subscriber base has grown much faster, Reliance Jio has reported a drop in ARPUs. 

Taking stock of the results, Mukesh Ambani said, “The strong financial results of Jio in a competitive market environment demonstrates the robustness of the Jio business model and ability to offer the most value to our customers and partners. Jio has demonstrated that it can scale and sustain its strong financial performance.”

Reliance Jio has huge growth plans, and has built a future ready network which can easily deploy 5G and beyond technology in the last leg, the company said. “Jio has created an eco-system comprising network, devices, applications and content, service experience and affordable tariffs for everyone to live the Jio Digital Life,” said the release.

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