NEW DELHI: Without much fanfare, India’s biggest listed entity Reliance Industries (RIL) announced its quarterly and FY22 results on Friday evening.
While the company reported a strong year-on-year growth in net profit (though it missed street estimate at large), a close view of RIL result shows had it not been significant surge in ARPU and robust performance of its oil-to-chemical (O2C) business, its performance during the quarter would have faced major hurdles.
Jio, India’s largest telecom company, benefitted big time from how much it makes per subscriber, also known as ARPU (average revenue per user) even as it lost a whopping 10.9 million subscribers last quarter. Jio’s ARPU during the quarter stood at Rs 167.6 per subscriber a month, a healthy 21.3% growth on Y-o-Y basis and 10.5% growth on Q-o-Q basis.
This surge in the crucial metric came after Jio implemented up to 21% tariff hike last December.
While increased ARPU helped Jio to report double-digit growth in revenue and profit, continuous loss of subscribers is not a very positive sign, especially when the Mukesh Ambani-owned company is trying to touch the 500 million subscribers’ milestone.
Jio’s total customer base as of March 31, 2022, stood at 410.2 million, which is lower than 435 million the company had reported last year. It said SIM consolidation post the December 2021 tariff hike led to a net reduction of 10.9 million in customer base in Q4FY22.
“As per our telecom team’s assessment, ARPU for Jio is set to steadily expand to Rs 190 by FY24E from Rs 143 in FY21 and an estimated Rs 152 for FY22E. While the direction of margins and ARPU remains clear, given the sharply upward trends in average plans and the changing subscriber mix for Jio, earnings from this segment remains vulnerable to ARPU shifts. Every Rs 5 change in ARPU can impact RIL’s EPS by Rs 3, while a change of 10 mn net subscribers can impact its EPS only by Rs 1.2/sh or so,” analysts at ICICI securities said in a recent note.
Jio Platforms’ net profit increased 22.9% YoY to `Rs 4,313 crore in Q4FY22 and gross revenue rose 20.7% to Rs 26,139 crore during the quarter. It, however, missed analysts’ expectations of Rs 5,000 crore quarterly profit.