Reliance Jio Needs 4G Tariff Hikes to take Revenues to Next Level

Reliance Jio, India’s largest telecom operator, released the Q2 Fy23 report a couple of days back. While the analysts expected the telco’s average revenue per user (ARPU) figure to cross Rs 180 levels, that didn’t happen. The lower the ARPU, the lower will be the overall revenues. With Jio, there’s definitely an advantage of scale. But the revenues won’t improve much if the scale of customers goes slightly higher and the ARPU sees a very marginal growth. Jio’s ARPU was Rs 175.7 in Q1 FY23. In the following quarter, it jumped to Rs 177.2. This is a very marginal growth. Because of this, even the overall profits posted by the company saw minimal growth. In Q1, Jio posted a net profit of Rs 4530 crore, while in the second quarter, it stood at Rs 4729 crore.

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While this is still much better than what the other telcos are posting, from the perspective of an investor, it is slow growth. Keep in mind that Reliance Industries Limited (RIL) wants to ship Jio off as another listed entity in the Indian stock exchanges. Thus, the investors interested in buying a piece of that would be more interested in how the company’s performance is improving and at what rate.

Jio is likely to continue posting profits and stronger revenues than the other operators. Just for comparison, Airtel’s ARPU was Rs 190, yet, its net profit stood at Rs 2145 crore, while Jio’s net profit stood at Rs 4729 crore. Jio’s net profit is double of what Airtel is generating. But is it enough?