Jio Platforms Q1FY27 profit rises 9%, Arpu grows marginally

Ahead of a potential initial public offering (IPO), Jio Platforms on Friday reported steady growth in the April-June quarter (Q1FY27) driven by continued subscriber additions, traction in the home broadband segment and growth in digital services.

Jio Platforms, which houses Reliance Industries Ltd's telecom and digital services business, reported 9.2% year-on-year growth in net profit to ₹7,764 crore during the quarter. Profit, however, fell 2.15% sequentially due to higher finance costs and depreciation expenses during the quarter as 5G network assets became operational.

Revenue from operations rose 2.4% quarter-on-quarter and 12% year-on-year to ₹39,173 crore. Jio said the revenue growth was driven by continued subscriber addition, organic average revenue per user (Arpu) growth and growth in digital services.

In the March quarter, the company's revenue from operations had grown 2.7% sequentially and 12.6% year-on-year to ₹38,259 crore. It had clocked a net profit of ₹7,935 crore in the quarter, with a 4% sequential and 13% year-on-year growth.

“Jio’s performance across mobility, home broadband and enterprise services remained strong, driving healthy earnings growth of 15% Y-o-Y," Mukesh D. Ambani, chairman and managing director, Reliance Industries said in a statement.

“During the quarter, Jio Platforms Limited filed its DRHP (draft red herring prospectus) with SEBI, a significant step towards its public listing. The upcoming IPO will be an important milestone in Jio’s journey and will give investors an opportunity to participate in India’s digital growth story,” he said.

Jio’s earnings before interest, taxes, depreciation, and amortization (Ebitda) rose 15.1% on-year and to ₹20,865 crore in the June quarter owing to increase in revenue. Ebitda margin expanded 150 basis points on-year to 53.3%.

IPO backdrop

The earnings come weeks after Jio Platforms filed its draft red herring prospectus with the Securities and Exchange Board of India (Sebi), setting in motion the process for what could potentially be India's biggest IPO so far. The issue is expected to raise ₹32,000-35,000 crore, according to bankers and analysts.

The company plans to raise capital through a fresh issue of 270 million equity shares with a face value of ₹10 each. Existing investors will not sell shares in the IPO. Jio plans to use up to ₹27,500 crore of the proceeds to prepay certain borrowings taken by its material subsidiary, Reliance Jio Infocomm Ltd.

Arpu focus

Arpu, a key industry metric that tracks the average revenue earned per user, inched up modestly in the absence of tariff hikes.

Jio’s monthly Arpu rose marginally quarter-on-quarter and 3.3% YoY to ₹215.6 a month from ₹214 at the end of March. In the previous quarter too, the Arpu growth was flat. Promotional 5G offers also continue to restrict growth in the company’s Arpu.

Jio said Arpu increased further to ₹ 215.6 with better subscriber mix and positive seasonality partly impacted by promotional schemes for fixed broadband customers.

Analysts expect that the organic increase in Arpu could be restricted going forward as smartphone prices rise, particularly at the entry level. Higher prices could slow feature-phone-to-smartphone upgrades and weaken the premiumization trend, analysts said.

In comparison, Bharti Airtel's Arpu was at ₹257 at the end of March, while Vodafone Idea’s Arpu was at ₹174. Both the operators are yet to declare their earnings for the June quarter.

Reliance Jio net added 8.9 million subscribers during the June quarter, taking its subscriber base to 533.3 million. The company had added 9.1 million subscribers in the preceding quarter. Its total 5G subscriber base reached 285 million as of June end.