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Reliance Jio Infocomm: A typical no-tariff-hike quarter; SUC saving aids EBITDA

Reliance Jio Infocomm’s (RJio) Q3FY23 revenue was up 2.1% QoQ to Rs230bn in line with our estimates, while ARPU rose 0.6% QoQ to Rs178 due to higher addition of FTTH subscribers (subs). Sub growth decelerated to 1.2% QoQ (5.3mn net add); nonetheless, it was better than that of peers. This was a typical no-tariff-hike quarter where other parameters remained steady but relatively small to drive meaningful revenue growth. EBITDA grew by a strong 4.5% QoQ / 26.2% YoY to Rs120bn benefiting from lower SUC cost. License fees & SUC cost declined 8.7% QoQ and constituted only 9.2% of revenue. Network cost inflation was moderated at 0.6% QoQ / 15.8% YoY and we believe it was due to 5G cost capitalisation pending complete rollout. Depreciation increased 6.3% QoQ / 34.8% YoY on rise in data network utilisation. Net profit grew 2.7% QoQ / 28.3% YoY to Rs46bn. RJio has rolled out 5G in 134 cities using >25k sites and >150 radio, which implies significantly fast-paced deployment. We have cut our EBITDA estimates for FY23E / FY24E by 6.2% / 2.7% respectively on assuming delay in price hikes.


  • RJio’s revenue was up 2.1% QoQ / 18.9% YoY to Rs230bn in Q3FY23, which was in line with our estimates. The number of subs rose by 5.3mn to 433mn, up 1.2% QoQ. Sub-base growth for RJio has been better vs Bharti (based on TRAI monthly data) and was further aided by strong addition of FTTH subs. ARPU grew 0.6% QoQ / 17.5% YoY to Rs178 largely due to higher net add in FTTH and enterprise revenue. Mobile revenue acceleration hereon is possible on tariff hike. Q3FY23 was a typically no-tariff-hike quarter, hence we have no reason to be disappointed with the performance.
    Churn rate rose to 2.2% while gross sub addition dipped to 34.2mn (vs 32.7mn in Q2FY23). Minutes rose 3.3% QoQ / 10.4% YoY to 1,270-bn and data usage was up 2.8% QoQ / 23.9% YoY to 29,000-bn MB. Data usage growth was also aided by FTTH subs (which use higher quantities of data, and their numbers are growing fast for RJio).
  • SUC saving helped speed up EBITDA growth to 4.5% QoQ. Network costs rose only 0.6% QoQ / 15.8% YoY to Rs72bn. Our working shows operating costs associated with 5G service expansion should have been capitalised pending complete 5G rollout. Access charges rose 16.4% QoQ / fell 3.9% YoY to Rs2.2bn. SG&A expenses were up 36.6% YoY (11.9% QoQ) to Rs10.2bn; employee costs increased 10.8% YoY (declined 6.5% QoQ) to Rs4.0bn. Licence fee & SUC cost dipped 8.7% QoQ on full-quarter benefit of SUC saving. EBITDA grew 26.2% YoY / 4.5% QoQ to Rs120bn and EBITDA margin was 52.2% (up 120bps QoQ). Excluding the SUC saving, EBITDA margin expanded 10bps QoQ.
    Depreciation and amortisation (D&A) rose by a sharp 6.3% QoQ (34.8% YoY) to Rs48bn on higher data utilisation (depreciation is linked to network capacity utilisation). Finance cost dipped 17.1% YoY to Rs10bn on refinancing of deferred spectrum liability with low-cost NCDs while interest cost on deferred spectrum liability related 5G likely capitalised. Net profit grew 28.2% YoY (2.7% QoQ) to Rs46bn.
  • Jio Platforms’ revenue rose 67% YoY (11.5% QoQ). Standalone revenue of Jio Platforms (which houses digital properties) grew by an impressive 11.5% QoQ / 67% YoY to Rs18bn in Q3FY23. This was helped by three factors: 1) tech support for group technology platforms including JioMart and other popular apps; 2) rise in content revenue from higher sub-base in FTTH and postpaid mobility; and 3) technology subsidiaries. EBITDA grew 9% QoQ / 32% YoY to Rs4.8bn (including other income).
  • 5G deployed in >25k sites. RJio has deployed its 5G BTS (entire six sectors) in over 25k sites, which implies BTS rollout has already crossed 150k indicating that Indian telcos are deploying 5G at an accelerated pace. RJio 5G has presence in 134 cities in 18 circles, which we think is impressive. 5G for RJio is delivering consistent experience of >600Mbps. Company has reiterated its commitment to complete pan-India 5G rollout by Dec’23.
  • RJio to implement SD-WAN for IOCL. Indian Oil Corporation (IOCL) has selected RJio for providing SD WAN based solution for retail automation and other critical business process such as payment processing, daily price update, network operating with enterprise-grade connectivity. RJio will deploy and manage SD-WAN for IOCL across its 7,200 retail outlets for a period of 5 years. This is one of the largest deployments of SD-WAN solutions in India.

For report,

CT Bureau

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