India’s newest and only profitable telecom operator Reliance Jio Infocomm Ltd is expected to show improved revenue on the back of strong subscriber additions, but its average revenue per user (ARPU) may decline given that a chunk of these additions comprise low-paying users.
Jio’s parent Reliance Industries will announce its financial results for April-June quarter later today. Jio had reported a profit of ₹8.4 billion for the March quarter on an operating revenue of ₹111 billion. It had a subscriber base of 306 million as of March end.
Goldman Sachs expects Reliance Industries’ telecom arm to report a revenue of ₹119 billion with 329 million subscribers, while ARPU is expected to drop to ₹125.
Though Jio has witnessed a continuous drop in its average monthly billings over the past five quarters, it still outperforms its rivals on this metric. From Rs154 in the December 2017 quarter, Jio’s ARPU fell 15.6% to ₹130 in the same quarter in 2018 and to ₹126.2 in the March 2019 quarter.
ARPU is the total revenue of the operator divided by the number of users or connections on its network.
Comparatively, Airtel’s ARPU for the March quarter was ₹123, an 18.6% increase from ₹104 in the December quarter. Vodafone Idea lags behind these two at ₹104.
At a time when its rivals are weaning away bottom-of-the-pyramid subscribers by launching minimum recharge plans and improving their ARPU, Jio continues to widen its subscriber base by adding low-paying users on its network.
“RJio ARPU will be soft as more JioPhone users are added at low price points. However, strong subscriber addition for RJIo to lead to higher Q1 revenue," Axis Capital said in a report dated 3 July.
Industry analysts will look out for management commentary on the company’s ability to maintain revenue momentum, capex outlook and update on the rollout of its fibre-to-the-home (FTTH) offering Jio GigaFiber.
Jio GigaFiber is touted to be the largest greenfield fixed-line broadband rollout globally, with simultaneous introduction in 1,600 cities across India.
“Price hikes are unlikely this year...and challenges in last-mile connectivity for FTTH persist," IIFL Institutional Equities said in a report dated 3 July.
The commercial launch of GigaFiber, still in the works, could disrupt the wired broadband market in the same way the company had disrupted the wireless market in September 2016.