Reliance Jio posts net profit of Rs 5.1 bn in Q4; subscriber base up 16%

Telecom disrupter Reliance Jio closed the year ended March on a high note, reporting a net profit of Rs 5.1 billion in the fourth quarter (Q4) of 2017-18, which was in line with Street estimates. Revenue stood at Rs 71.28 billion, up 3.6 per cent sequentially, from Rs 68.81 billion in the quarter ended December 2017 (Q3). 

The January-March 2018 period was the second consecutive profitable quarter for Jio, which closed FY18 with a net profit of Rs 7.23 billion aided by an operating profit of Rs 67.34 billion ($1.1 billion).

The Mukesh Ambani-led telco, however, saw an 11 per cent drop in average revenue per user (ARPU) per month to Rs 137.1 from Rs 154 in Q3 of FY18, when it had posted a Rs 5.04 billion net profit.

“Jio has demonstrated that it can scale and sustain its strong financial performance,” said Mukesh Ambani, chairman and managing director, Reliance Industries.

The earnings before interest, tax, depreciation and amortisation (Ebitda) grew 2.5 per cent sequentially to Rs 26.9 billon, as a result the Ebitda margin dipped marginally by 40 basis points over the December quarter to 37.8 per cent. Yet, this would be the highest among Indian telecom service providers, given that Bharti Airtel reported an Ebitda margin of 28.4 per cent for its India mobile business in Q4, while Idea is expected to post a net loss in the quarter.

Jio’s balance sheet size went up by 11 per cent to Rs 2.54 tillion. At the end of March 2018, total borrowings stood at Rs 570 billion, versus Rs 534 billion a year ago. Equity capital went up to Rs 1.03 billion on the back of preferential share allotment during the quarter, compared with Rs 709 billion at the end of March 2017.

Jio increased its subscriber base by 16 per cent sequentially to 26.5 million in the quarter, taking its total subscriber base to 186.6 million. Net subscriber addition for the telco during the year 2017-18 was at 83 million.

In a report this month, Morgan Stanley analysts had said: “Our current base case scenario assumes 40 million low-end subscribers and all of them are on the Rs 49 tariff plan. However, even if half of these subscribers were to be on the Rs 153 plan, the ARPU decline could be about 12 per cent quarter-on-quarter (versus a 19 per cent decline in our base case) leading to 3 per cent sequential revenue growth and flat Ebitda and profit after tax, on a q-o-q basis.”

During the quarter, Jio’s parent company, Reliance Industries, announced a strategic transaction for combination of JioMusic with Saavn, a leading global music over-the-top platform, to form India’s largest platform for music, media and artists. The combined entity was valued at over $1 billion, with JioMusic’s implied valuation at $670 million.

The Telecom Regulatory Authority of India reduced domestic mobile termination charges (MTC) from Rs 0.14 per minute to Rs 0.06 per minute effective October 1, 2017, and the international MTC rate from Rs 0.53 per minute to Rs 0.30 per minute effective February 1, 2018. 

While these cuts have impacted incumbents like Airtel, Idea and Vodafone, Jio has benefited in the form of lower costs.

India’s largest telecom operator, Airtel, reported a 78 per cent drop in net profit to Rs 830 million in the March quarter, with its ARPU falling to Rs 116 from Rs 158 a year ago, and Rs 123 in the December quarter. 

Airtel, like other incumbents, has maintained that the rate cuts have been responsible in lowering ARPU across the industry. Airtel has added 15.5 million subscribers during the same quarter. Average data consumption for Jio stood at 9.7 GB per user per month, average voice consumption was at 716 minutes per user per month and average video consumption was at 13.8 hours per user per month. For the quarter, Jio said its wireless data traffic was 5.06 billion GB and voice traffic of 372.18 billion minutes.

Reliance Retail PBDIT jumps threefold  

Reliance Retail, the retailing arm of Reliance Industries, posted a threefold jump in its profit before depreciation, interest and taxes (PBDIT) in the fourth quarter of financial year 2018. It posted a PBDIT of Rs 10.86 billion in the Q4FY18 compared to Rs 3.52 billion in Q4FY17. Its revenues went up 2.3 times at Rs 241. 83 billion in Q4 FY18 from Rs 103.32 billion in Q4 FY17.