Reliance Jio delivered another quarter of healthy financial performance, recording a double-digit year-on-year growth in net profits during October-December 2019. Further, Jio overtook Vodafone Idea to become the largest wireless operator in India in terms of both subscriber base and revenue market share. The operator touched 370 million subscribers during the quarter, becoming the world’s fastest growing digital services company. Jio’s subscriber base has expanded at the cost of Vodafone Idea Limited (VIL), which has posted a consistent decline in its subscriber market share over the past two years. Further, while players such as Bharti Airtel and VIL were reeling from their long-standing losses and struggling to pay their adjusted gross revenue (AGR) dues, Reliance Jio was the only operator to meet the Supreme Court’s deadline, paying Rs 1,950 million in January 2020.

A look at the operator’s operational and financial results for the quarter ended December 2019…

Performance parameters

Reliance Jio became India’s largest and only profitable telecom operator, reporting a year-on-year growth of 62.5 per cent in its stand-alone net profit from Rs 8.31 billion to Rs 13.5 billion. The stand-alone revenue from operations, including access revenue, grew from Rs 108.84 billion to Rs 139.68 billion during the same period. Meanwhile, its stand-alone earnings before interest, taxes, depreciation and amortisation (EBITDA) stood at Rs 56.01 billion during the quarter ended December 2019, registering a year-on-year growth of 38.2 per cent. Further, the EBITDA margin stood at 40.1 per cent, which is one of the highest in the sector.

On the operational front, customer engagement continued to improve, with a year-on-year increase in average data consumption per user per month from 10.8 GB in December 2018 to 11.1 GB in December 2019. The operator’s average voice consumption stood at 760 minutes per user per month during the quarter ended December 2019. Meanwhile, its ARPU improved and stood at Rs 128.40 per subscriber per month. The ARPU has risen after successive declines in the previous seven quarters as the company started charging 6 paise per minute for calls made to other telcos’ networks. Meanwhile, Jio became a net recipient of access charges within two months of implementation of interconnect usage charges tariffs, with the share of outgoing traffic in the overall off-net traffic reducing to 48 per cent by the end of the quarter. This can be attributed to the loss of 22 million subscribers during the quarter, mainly heavy voice users, with the underlying churn remaining stable. The total wireless data traffic during the quarter stood at 12.08 billion GB, while the total voice traffic during the quarter stood at 826.4 billion minutes.

The company maintained a strong momentum in subscriber acquisition with a gross addition of 37.1 million subscribers and a net addition of 14.8 million subscribers, taking its total subscriber base to 370 million as of December 31, 2019.

Streamlining structure

On the strategic front, in October 2019, Reliance Industries Limited (RIL) set up a wholly owned subsidiary, Jio Platforms Limited, for all its digital initiatives, with a total capital infusion of Rs 1.73 trillion. Jio Platforms Limited will house all of RIL’s digital entities including Reliance Jio and other technology-based initiatives in education, healthcare and agriculture. These initiatives are also backed by investment in next-generation technologies such as blockchain, artificial intelligence, machine learning, augmented/mixed reality and Edge computing. Further, the telco has launched the Unified Payments Interface (UPI)-powered payments service, becoming the first telecom operator to enter the UPI payments space. Going forward, the operator is planning to enter into distribution of mutual funds as well as other financial products.

By Shikha Swaroop