72 mln Jio Prime users lift Reliance Industries shares above Rs 1,400; 1-week gain – 14%

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April 5, 2017 6:14 PM

Reliance Industries shares ended at Rs 1,414.9 on BSE today, up 3.2% from the previous close. At today’s close, the heavyweight stock has gained 13.6% in five straight trading session gains.

Moody’s Investor Service said that Jio Infocomm’s 72 million paid customers are “credit positive” for the parent Reliance Industries, as subscriber enrolment reduces cash flow uncertainty for the telecom business. (Image: Reuters)

Reliance Industries shares surged again on Wednesday to close above Rs 1,400-mark for the first time in over nine years, further extending its stellar gains of previous two trading sessions on the back of encouraging subscription for its Jio telecom services.

Reliance Industries shares ended at Rs 1,414.9 on BSE today, up 3.2% from the previous close. At today’s close, the heavyweight stock has gained 13.6% in five straight trading session gains.

Earlier today, Moody’s Investor Service said that Jio Infocomm’s 72 million paid customers are “credit positive” for the parent Reliance Industries, as subscriber enrolment reduces cash flow uncertainty for the telecom business.

Moody’s said that according to its calculations, Jio will earn about Rs 21,300 crore in revenue in the current financial year 2017-18, assuming that all 72 million users pay Rs 303 per month (28 days) between July 2017 and March 2018.

“This is credit positive as the subscriber enrolment reduces cash flow uncertainty of the telecom business, on which RIL has spent over Rs 1.7 lakh crore over the last six years,” Moody’s said.

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Earlier Friday, Reliance said 72 million subscribers have signed up for its ‘Prime’ plan, under which the users will pay it a fixed sum of Rs 303 per month over the next 12 months. Further, Reliance Jio also extended the deadline to sign up for Jio Prime services to April 15, and also said that its Prime users would continue to get three months of complimentary services till June after their first purchase of a recharge worth Rs 303 or more.

Reliance Industries shares are on a sustained rise on the prospects of cash flows from its telecom business, which has seen heavy investments so far. Reliance Jio Infocomm has now started charging money from consumers for using its mobile telephony services, which it was offering so far for free.

Prime subscription brings certainty of revenue to Reliance Industries, Moody’s said. “… there was uncertainty about the success rate of transitioning non-paying subscribers to paid plans, but that uncertainty has now reduced to a large extent,” it said.

A slew of brokerages have recently raised their target on share prices of Reliance Industries citing the company’s investments not only in telecom, but also in its traditional energy and petrochemicals businesses coming to bear fruit.

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