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Reliance Jio’s profitability improves as tariffs rise, but its user base continues to dwindle

With a 20 percent pricing hike and a better customer mix owing to semiconductor consolidation, Reliance Jio saw improved profitability. The average revenue per user (ARPU) increased by 10.6% to Rs 167.6, beating analyst expectations. The number of subscribers dropped by 10.8 million in the fourth quarter.

Reliance Jio, a subsidiary of Reliance Industries, had a net profit of Rs 4,173 crore in the fourth quarter of FY22, compared to Rs 3,615 crore in Q3. The company’s revenue increased to Rs 20,901 crore from Rs 19,347 crore in the previous quarter. In terms of profitability, the telecom giant achieved significant milestones, with EBITDA exceeding Rs 10,000 crore and a margin above 50%.

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Reliance Jio’s average revenue per user (ARPU) increased by 10.6% quarter on quarter to Rs 167.6. The company’s profitability has improved as a result of a 20 percent tariff increase. The ARPU performance has also benefited from a better subscriber mix.

Jio’s subscriber count continued to decline, reaching 410.2 million by the end of March 2022, down from 440.6 million at the end of the first fiscal quarter. “SIM consolidation post tariff hike resulting in net subscriber reduction,” management claimed. “Recent trends indicate that SIM consolidation is abating as the pricing hike impact is absorbed,” Jio added.

The telecom service provider increased customer interaction by 47.5 percent year over year to 24.6 Exabytes in the fourth quarter. In comparison to the previous fiscal year, per capita data increased by 48.1 percent to 19.7 GB. Average monthly phone calls increased 17.6% year over year to 968 minutes.

“Within two years of its launch, JioFiber has surpassed all other broadband service providers,” the management stated. JioFiber has a total of 6 million connected premises, with an average daily endgame of five hours on the set-top box.

The telecom sector’s tariff surge has given Jio’s performance a much-needed lift, but analysts are concerned about the decrease in user numbers. However, management’s optimistic remarks about the suspension of subscriber reductions as a result of the rate hike being absorbed should allay fears on this front.

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