Subscriber loss in Q2 makes tariff hike tough for Jio

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After a steeper-than-expected decline in its customer base in the September quarter, tariff hike looks difficult for Reliance Jio. The Economic Times quoted US brokerage Jefferies, which cut the telco’s value by 2% to $88 billion, as saying that Jio’s 2Q results were “operationally weak”. The decrease in valuation was due to “lower-than-expected revenues and higher-than-expected interest expenses”.

But higher revenues per user and the launch of affordable smartphones during Diwali should mitigate downside risks, the report said.

It quoted analysts as saying that Jio’s profit growth remained flat sequentially in the September quarter, owing mostly to a 32% increase in finance expenditures related to spectrum purchases in the March 2021 auction, as well as subscriber losses of more than 11 million.

Jio’s net profit in the fiscal second quarter was flat at Rs 3,528 crore, compared to Rs 3,501 crore in the April-June period, but revenue increased to Rs 18,725 crore from Rs 17,994 crore in the previous quarter.

Despite client losses, Jio remains the market leader, with 429.5 million customers as of September, compared to 321.23 million and 255.4 million users reported in the June quarter by Airtel and Vi, respectively. Airtel and Vi are yet to release their second-quarter results.

JioPhone launch

To attract more customers, Jio plans to launch JioPhone Next, a low-cost 4G smartphone built in collaboration with Google, around Diwali. Due to the ongoing global chip scarcity, the device’s intended September release date was postponed.

Meanwhile, in the July-September period, Jio’s average revenue per user (ARPU) was raised by a combination of dramatically increasing data use and the elimination of low-paying subscribers.

In the fiscal second quarter, Jio’s ARPU – a crucial performance parameter for the telecom company – increased by 3.7 percent on-quarter to about Rs 144.

Data consumption is up

Mobile data consumption got a boost, as evidenced by a 10% sequential increase in the 4G operator’s mobile traffic to 214 PB (petabyte) per day in the September quarter.