Reliance Jio Exceeds Expectations In Profits But Gets Limited By ARPU

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Reliance Jio
Reliance Jio’s quarterly earnings report has been under a hot discussion from analysts, investors, and telecom subscribers alike. The telecom operator’s and RIL’s combined earnings reports have been making rounds of the internet because of the peculiarity in the figures, which point us to look deeply into what is going on with the telco’s finances and subscriber addition. To recall, Reliance Jio’s Average Revenue Per User (ARPU), the highest chased metric of the industry, stood at Rs 138.2 in the previous quarter. However, as per the latest earning report, which expected the ARPU to hit higher standards, the telecom operator could not only inch it forward to Rs 138.4, thus signalling a very marginal increase in ARPU.

ARPU Rise Limited By Low Paying Customers

On the other hand, the other metrics like the standalone profits surpassed the expectations of the analysts, which was pegged at Rs 3,501 crore. Brokerage firm Jefferies remarked that the current ARPU of Reliance Jio is slightly below the expectations. The figures were reported by ET Telecom.

The total subscriber addition in the quarter stood at 14 million for Reliance Jio. A figure which far trumps other telecom operators. But, the reason why this subscriber addition could not translate to higher ARPU is JioPhone. Most of the chunk of subscribers which were added to the Jio pool consisted of the low-paying JioPhone customers on the back of the offers introduced by the telco in recent times.

Reliance Jio EBITDA Might Take a Small Hit In Coming Quarters

The investment firm also made predictions for Reliance Jio in the coming years. For the period 2021-24, Jeffries said that the total subscriber count of Reliance Jio would reach 530 million. In the same period, the company is expected to deliver a CAGR of 15% on its revenues and 20% CAGR on profits.

As per the analysts’ report, in the present quarter, Reliance Jio’s EBITDA and profits stand strong because of lower than expected license fees and interest expenses. However, in the coming quarters, the higher operating costs might burden these figures. The JioFiber customers are high paying ones for Reliance Jio, who seem to be using around 300GB of data per month.

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Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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