Reliance Jio Subscriber Churn Dipping, ARPU Rising a Good Thing

Reliance Industries Limited (RIL) last week announced its financial results. Reliance Jio, a telecom company owned by RIL, posted a strong performance in Q1 FY23. This was due to multiple factors. First, let’s take a look at the numbers if you haven’t already. Jio’s revenues went up by 4.7% QoQ because of higher ARPU (average revenue per user) and subscriber addition. Jio’s ARPU stood at Rs 176.7 in Q1 FY23, which is higher than Rs 167.6 in Q4 FY22.

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ICICI Securities said that incremental EBITDA (earnings before interest tax depreciation and amortisation) was restricted at 46.7% because of a sharp rise in expenses. The network cost jumped 14.5% YoY and 4.7% QoQ on rise in diesel prices and higher expensing of InVIT rents. The depreciation rate also grew sharply by 13% QoQ and 36% YoY because of rise in utilisation and higher tower count leading to higher lease liability accounting.

As per ICICI Securities, the key will be to watch the spectrum investment in the upcoming 5G spectrum auction. Jio has submitted an EMD (Earnest Money Deposit) of Rs 14,000 crore.

JioPhone Next Helped with Subscriber Addition

ICICI Securities said that the subscriber count for Jio improved with higher contribution from smartphones (helped by JioPhone Next) and a rise in FTTH base. Jio’s FTTH business is booming, and JioFiber has already become the largest FTTH services provider in the country.

One of the biggest positives in Q1 FY23 for Jio was a dip in subscriber churn rate to 2% from 3.7% in the previous quarter. Jio had also been clearing its subscriber base from inactive users. This also helped the company in getting rid of a bad VLR or active subscriber percentage score. The ARPU figure was also boosted because of the clearing of inactive users.