Reliance Jio’s ARPU to rise to Rs 147 in FY21: Fitch Ratings

Reliance Jio Infocomm’s (RJio) Average Revenue Per User (ARPU) is expected to rise to Rs. 147 in FY21, from Rs. 131 in the fourth quarter of fiscal 2020, according to a Fitch Ratings’ study.

The brokerage also expects RJio to add 30 million subscribers during FY21 against 80 million additions in FY20 (Q4FY20: 17.5 million). RJio’s fibre-to-the-home business is also expected to start contributing to revenue and EBITDA in FY21, buoyed by strong demand for home broadband.

Retail business

Reliance Industries Ltd’s (RIL) telecom business is expected to benefit from higher data and voice consumptions during the lockdown, and mitigate any impact of slower subscriber additions. RIL’s consumer businesses would be less affected by the lockdown and social-distancing measures and to contribute about 50 percent of consolidated EBITDA in FY21.

Fitch expects RIL’s retail segment revenue, excluding digital-services business, to rise by 10 per cent in FY21 against 15 percent in FY20.

Retail revenue would be affected by lower footfalls in its physical retail stores and lower spending on discretionary electronics and lifestyle products. However, the impact would be mitigated by higher grocery sales and also from its partnership with Facebook, which will allow users to buy goods and services using WhatsApp and Facebook Messenger, it added.

It also expects RIL’s oil-to-chemical segments to face volume and margin headwinds due to weakening of demand for refined products and petrochemicals in 2020, with gradual recovery through 2021 to pre-COVID-19 levels.

“We expect capacity utilisation for both its refining and petrochemical business may decline by around 10 per cent in FY21 YoY. We also expect the petchem segment’s EBITDA margin to decline to around 19 percent in FY21, compared with 21 percent in FY20 (FY19: 24 percent),” it added.

―The Hindu Business Line