Jio’s Q3 revenue seen rising, but digital services yet to catch up

The telecom arm of Reliance Industries Ltd, Reliance Jio Infocomm, is expected to clock in higher revenues in the December quarter, driven by improved average revenue per user (Arpu) and addition of high-paying customers to JioFibre, the company’s fixed-line broadband services.

However, parent Jio Platforms’ revenue is yet to come on a par with the telecom segment because various digital services businesses remain in the development stage and as capital raised from investors in 2020 will be utilised over the next few quarters, analysts said.

Jio Platforms’ revenue is to likely to grow 4.3% sequentially to ₹193 billion in the December quarter, while the telecom arm is expected to register a 3.7% growth sequentially and a 29.8% year-on-year rise in revenues, according to brokerage firm Axis Capital.

Jio Platforms Ltd, which houses the telecom business and a slew of other digital services such as healthcare, payments, gaming, cloud, over-the-top (OTT) content, music, among others, in 2020, raised ₹1.52 trillion from thirteen global investors – Facebook, Google, Silver Lake, Vista Equity Partners, General Atlantic, KKR, ADIA, Mubadala, TPG, L Catterton, Public Investment Fund of Saudi Arabia, Intel Capital, and Qualcomm.

Jio Platforms’ revenue is likely to grow 4.3% quarter-on-quarter to ₹193 billion during October-December, while the telecom arm is expected to clock a 3.7% growth sequentially and a 29.8% year-on-year rise in revenue to ₹181.3 billion, according to brokerage firm Axis Capital.

Analysts expect that the telecom business’s Arpu in the third quarter will rise on the back of annual recharges by residual subscribers at higher tariffs for the first time since the hike in December 2019.

Axis Capital said Jio’s revenue will grow in October-December as India’s largest telecom operator by market share is expected to have added 6 million subscribers and its Arpu should improve by 2% to ₹148 from ₹145 a quarter ago. Addition of higher-paying customers to JioFibre, which introduced cheaper plans last year to cash in on the surge in covid-led internet demand, may also support Arpu growth.

However, it said, “Net subscriber addition will be muted, based on the October 2020 data released by Trai (Telecom Regulatory Authority of India)”. Churn rate, which heightened due to covid-led restrictions starting March, is expected to remain elevated.

Analysts said farmers’ protests in the national capital region will have an impact on Jio’s subscriber addition in Q3. “We expect net additions for Jio to remain relatively modest at 7 million (versus 7.3 million in Q2). Farmers’ protests in states like Punjab and Haryana had an impact, in our view,” BofA Securities said in a report.

Jio has alleged that rivals Bharti Airtel Ltd and Vodafone Idea Ltd (Vi) are carrying out unethical and anti-competitive mobile number porting to capitalise on the ongoing protest.

Earlier this month, Jio said over 1,500 of its nearly 9,000 telecom towers were damaged, causing disruptions to its mobile network, affecting services, which led to inconvenience to many among its 14 million subscribers in Punjab. Livemint