Reliance Jio’s Q3 FY23 performance was muted on both operating and financial parameters with weak subscriber growth (5.3 million), high churn (2.25% per month), modest average revenue per user growth of 0.6% QoQ to Rs 178 and data usage growth of 2.8% QoQ despite noise surrounding FIFA.
Selling and distribution costs inched up for fourth and depreciation & amortisation for fifth consecutive quarter and were negatives. Meagre 0.6% QoQ rise in biggest line-item of network costs was a rescue. Revenue/Ebitda/adjusted profit after tax grew by 2.1/4.5/2.7% QoQ.
In a quasi-duopoly market especially posts 5G, Jio is a healthy growth story in the medium term. These shall be led by moderate subscriber growth (gains from weaker player can accelerate this significantly which is likely) and consistent rise in ARPU (8-12% compound annual growth rate).
In parallel, we expect Jio to capitalise on alternate revenue streams. Jio’s 5G strategy and pick-up would be key to monitor post hefty investments (Rs 1.32 trillion in FY21plus FY22 for spectrum). Steep capex, trivial free cash flow and high debt are key challenges in short-to-medium term perspective. Bloomberg