According to a recent report by ICICI Securities, Reliance Jio’s revenues grew only 1.7 per cent quarter-on-quarter (QoQ) in the fourth quarter (Q4) FY21 to Rs 174 billion.

This, the report added, is slowest since its commercial launch, while average revenue per user (ARPU), excluding interconnect revenues, dipped by 0.8 per cent QoQ to Rs 138.

Further, the report added that, though Jio’s subscriber base expanded by 15.4 million during the quarter, likely helped by the new tariff plan launch on JioPhone (at 18-33 per cent discount), but the absolute ARPU (post-GST) is just Rs 46-56 (33-40 per cent of blended ARPU) from the JioPhone users. If we adjust for fiber-to-the-home (FTTH) revenues, then, underlying mobile revenues should have grown at only ~1 per cent QoQ, which indicates Jio may be running into a risk of revenue market share loss in Q4FY21. We have cut our FY22E/FY23E revenues by 2.4 per cent each year on slower revenue growth, but see tariff hike helping drive growth, likely in H2FY22E, the report stated.

Further, the report said that Jio needs tariff hikes to offset higher cost inflation. Network cost rose 30 per cent in FY21 to Rs 221 billion and, considering rise in payment to tower and fiber infrastructure investment trust (InvIT), we estimate network cost inflation to remain high even in the next two years at least, not considering 5G rollout. It believes that Jio will also need tariff hikes to maintain earnings growth momentum.