Reliance Jio posts ₹1,350 crore net profit in Dec quarter, Arpu rises

Reliance Jio Infocomm Ltd, India’s largest and only profitable telecom operator, reported a 62.5% year-on-year rise in net profit to ₹1,350 crore for the December quarter, on the back of its move from free voice calling to imposing user charges for calls made to other operators.

The company’s operating revenue rose 28.3% y-o-y to ₹13,968 crore, while its average revenue per user (Arpu) rose to ₹128.4, after successive declines in the last seven quarters, following its decision to charge for calls made to rival networks at 6 paise per minute. It had 370 million subscribers as of December-end.

Arpu is the total revenue of the operator divided by the number of users or connections on its network. From ₹154 in the December 2017 quarter, Jio’s Arpu steadily declined to ₹120 in the September 2019 quarter.

On 10 October, Jio said it would charge users 6 paise a minute for calls made to other networks to account for interconnect usage charges (IUC) that it has to pay to rival operators.

The operator said in October that it “had been compelled, most reluctantly and unavoidably”, to make the shift after the Telecom Regulatory Authority of India’s (Trai) decision to review the date for scrapping IUC from 1 January, 2020, led to regulatory uncertainty. “Jio became a net recipient of access charges within two months of implementation of IUC tariffs, with outgoing traffic in overall offnet traffic reducing to 48% by the end of the quarter. This was combined with associated elimination of excessively heavy voice users, with underlying churn remaining stable,” Jio said on Friday.

Average data consumption per user per month was 11.1 GB and average voice consumption was 760 minutes per user per month, Jio said.

Airtel and Vodafone Idea are yet to announce their financial results for the December quarter.

Rival Airtel’s Arpu fell to ₹128 in the September quarter from ₹129 in the June quarter. Vodafone Idea’s Arpu for September quarter was ₹107.

Vodafone Idea’s loss during the September quarter stood at ₹50,922 crore—the highest in India’s corporate history. Airtel, too, reported its highest quarterly loss in 14 years at ₹23,045 crore in the quarter ended September.

The companies reported record losses for setting aside money to pay licence fee dues to the government, after the Supreme Court upheld the Department of Telecommunication’s definition of adjusted gross revenue (AGR).

According to the DoT, AGR comprises all revenue of a licence holder, including those from non-core telecom operations, such as rent, dividend and interest income. Licence and spectrum charges are calculated at 8% and 3-5% of AGR, respectively.

Even as its competitors face huge AGR dues, Reliance Jio has become the number one telecom operator in India by both subscriber base as well as revenue market share, achieving the feat in just over three years of starting operations. The company led by Mukesh Ambani added 5.6 million mobile subscribers in November, taking its total user base to 369.93 million, and replacing Vodafone Idea as the country’s largest mobile services provider by subscribers, data released by the sector regulator on Thursday showed.

With this, Jio holds a 32.04% share in the over 1.15-billion-user Indian mobile services market. It had a 30.79% market share at the end of October. Unlike its rivals, Jio’s user base comprises entirely of 4G subscribers.