Reliance Jio records net profit of Rs 990 crore during second quarter

By: |
Published: October 19, 2019 6:03:22 AM

Anshuman Thakur, strategy and planning head, Reliance Jio, said that the 6 paisa charge is purely to recover this regulatory cost and does not account for any changes in the tariff plans of the company.

Reliance Jio, Reliance Jio profit, telecom operator, subscriber, August, mobile subscriber base,  subscriber base, industry news, telecom news, Trai,Airtel , Vodafone ideaDespite good margins and revenue growth, the downward slide on Arpu continued during the quarter, albeit the fall was arrested.

Reliance Jio, the country’s second largest telecom operator with 355.2 million subscribers, reported a net profit of Rs 990 crore during the second quarter, up 11.1% sequentially. While revenues increased 5.8% to Rs 12,354 crore quarter-on-quarter, the operating margins came in as a positive surprise, which expanded a good 170 basis points to 41.8% versus 40.1% in the previous quarter. The Ebitda (earnings before interest, tax, depreciation and amortisation) was up over 10.2% sequentially to Rs 5,166 crore. This is the first time Jio’s operating income has crossed Rs 5,000 crore.

On the ongoing issue about Jio charging its customers interconnect user charges (IUC) at the rate of 6 paisa per minute for outgoing calls to other networks, the senior management at Jio explained that during the quarter, the IUC charge at Rs 652 crore, is down from Rs 850 crore at the end of June quarter, which is due to the traffic mix. Jio has recently said that it has paid Rs 13,500 crore in IUC  to incumbents in the last three years.

Anshuman Thakur, strategy and planning head, Reliance Jio, said that the 6 paisa charge is purely to recover this regulatory cost and does not account for any changes in the tariff plans of the company.

Reliance Jio, Reliance Jio profit, telecom operator, subscriber, August, mobile subscriber base,  subscriber base, industry news, telecom news, Trai,Airtel , Vodafone idea

Consequently, it will boost the margins going forward as the cost is not being borne by Jio. “This 6 paisa we are collecting from customers and will reflect in our revenues, which will be passed on to the receiving operator. So far, this was a cost. Now that the customer is paying it, it will reflect on the operating margins going forward, to the extent that our costs will come down,” he said.

Despite good margins and revenue growth, the downward slide on Arpu continued during the quarter, albeit the fall was arrested. Jio reported a decline of about 2% in Arpu (average revenue per user) to Rs 120 during the September quarter, against a 3% decline seen in the June quarter. The Arpu was also above analyst estimates of Rs 118. The company had reported an Arpu of Rs 131.7 in the corresponding three months of July-September last year.

However, Thakur said, “The focus is on creating the digital ecosystem. There are more and more customers onto the network and ensuring they consume more data”.

On other operating metrics, Jio continues to perform on expected lines with its industry leading numbers. Its data traffic at 1202 crore GBs would be the highest in the industry. Compared to the preceding quarter it saw an increase of over 10%. Data usage per customer, however was flattish at 11,700 MB against 11,400 MB per subscriber in the preceding quarter. Incumbents are yet to declare their earnings for the second quarter.

Jio’s voice volume at 8,12,620 million minutes registered an increase of 3.3% compared to the preceding quarter. Usage per customer at 789 minutes registered a decline of 4% sequentially. Jio’s monthly churn remains the lowest in the industry at 0.74% per month. Jio continued its strong subscriber growth trend with net addition of 24 million subscribers during the quarter. Its gross adds stood at 31.6 million and total subscriber base at 355.2 million.

Commenting on the performance, Mukesh Ambani, chairman, Reliance Industries, said, “Jio crossed the 350 million subscriber mark to remain the world’s fastest growing digital services company, and we are still adding more than 10 million new customers every month. Jio is not only India’s largest telecom enterprise in terms of subscribers and revenues but has also become the digital gateway of India”.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Reliance Retail defies consumption slowdown, records 27 per cent rise in revenue
2RIL yet to decide on adoption of newer rate of corporate taxation
3Ambuja Cements Q3 net profit up 34% at Rs 533 crore