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It Took Reliance Jio Three Months Of Commercial Operations To Turn In An Operating Profit

  • Standalone operating profit at Rs 260 crore
  • Average revenue per user of Rs 156.4 is the highest in the industry
  • EBITDA stood at Rs 1,443 crore; EBITDA margin at 23.5 percent
  • Jio added 1.53 crore new subscribers in the July-September quarter
  • Total subscriber base at 13.86 crore
  • Jio had the highest per capita data consumption of 9.62 GB per user per month
  • Revenue from operations stood at Rs 6,147 crore, net loss stood at Rs 271 crore

Reliance Jio Infocomm Ltd. reported an operating profit in the first quarter of commercial operations even as it continues to drive a tariff war and consolidation in India’s telecom sector.

In its maiden quarterly filing, the Mukesh Ambani-led wireless carrier reported earnings before interest, tax, depreciation and amortisation of Rs 1,443 crore for the three months ended September, it said in a statement. Operating margin stood at 23.5 percent.

The country’s newest telecom operator’s average revenue per user was Rs 156.4. That compares with Rs 154 blended ARPU reported by Bharti Airtel Ltd., India’s largest mobile services provider, in the quarter ended June. Bharti Airtel is yet to announce its results for the second quarter.

Also Read: Reliance Q2 Below Estimates But Jio Delivers Positive Surprise

Jio’s performance only shows “if you have the right product at the right price you will get the returns that you want,” according to former Reliance Jio chief Sandeep Das. “It’s a vindication of their core strategy to ensure that they serve the data requirements of a large number of people in the bottom of the pyramid,” Das told BloombergQuint.

The newest telecom operator said that data consumption on its network averaged at around 9 GB per month per user. This is expected to rise to double digits as data usage grows and as Jio adds more content to its 4G services, Das added.

Sandeep Das, Former CEO And MD, Reliance Jio I don’t think we’ve seen anything more than the tip of the iceberg.

Reliance Jio began charging users from April after disrupting the industry with six months of free services. It still offers cheaper plans, forcing rivals to cut tariffs. As competition rose, Vodafone India and Idea Cellular Ltd. agreed to merge. Bharti Airtel too will take over Tata Group’s mobile services business, after acquiring Telenor’s India operations.

The Mukesh Ambani-led company has been gaining users, largely at the expense of smaller rivals. It added 1.53 crore new subscribers in the three months to September, taking its user base to 13.86 crore.

Jio’s results are “incredible” news for the telecom industry, according to Rajan Mathews, chairman of the industry lobby Cellular Operators Association of India. If more data usage can push the ARPU to Rs 200 a month, “then it’s good for the health of the industry as other operators too can start pushing up” their tariffs, Mathews told BloombergQuint.

He added that Reliance Jio has set a benchmark, which incumbent operators will have to match, and in turn will benefit customers.

Rajan Mathews, Chairman, COAIJio has set the pace, rest of the competition is trying to quickly catch up. 

Jio’s “cut-throat pricing” and free services have ended up developing the data market, said Mahesh Uppal, telecom analyst and director of ComFirst India. The average data consumption, which was less than one gigabyte just a year ago, has now gone up to 9 GB in Jio’s case, he pointed out.

Reliance Jio reported a loss of Rs 271 crore on a standalone revenue at Rs 6,147 crore for the three months ended September. The company’s revenue market share, which has already increased significantly, is expected to go higher, according to Mayuresh Joshi, fund manager at Angel Broking. "If they’re able to expand RMS, you will see a gradual uptick in the margins," Joshi told BloombergQuint.

Watch the full discussion here.

(Corrects an earlier version to state that it’s the company’s first quarter of commercial operations in the headline and the first paragraph)

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