Mukesh Ambani’s Reliance Jio Infocomm Ltd turned profitable within 15 months of launch after disrupting the world's second-largest telecom market by triggering a tariff war and driving consolidation.
Jio reported a standalone net profit of Rs 504 crore in the quarter ended December compared to a loss of Rs 271 crore in the previous three months, according to a media statement. Revenue increased 12 percent sequentially to Rs 6,789 crore.
- Operating profit rose 82 percent to Rs 2,628 crore.
- Operating margin expanded nearly 15 percentage points to 38.2 percent.
Reliance Jio earned an average revenue of Rs 154 per user during the three months. Its ARPU declined slightly from the industry-high of Rs 156 in the previous quarter.
Jio benefited from the Telecom Regulatory Authority of India’s decision to reduce interconnect fee – that operators earn for completing calls by rival network subscribers – to 6 paise a minute from 14 paise. Smaller operators like Reliance Jio that have a relatively narrow reach usually end up paying more interconnect usage charges.
Reliance Jio began charging users from April 2017 after offering six months of free services. It still offers the cheapest data plans, forcing rivals to cut tariffs. As competition rose, Vodafone India and Idea Cellular Ltd agreed to merge. Bharti Airtel too is taking over Tata Group’s mobile services business, after acquiring Telenor’s India operations. Reliance Jio itself bought Anil Ambani-led Reliance Communication's mobile business during the quarter.
The Mukesh Ambani-led company has been gaining users, largely at the expense of smaller rivals. Despite being the newest entrant, Jio has accumulated more than 16 crore subscribers, making it the fourth-largest operator in December, according to its media release.
(This piece was originally published in BloombergQuint and has been republished with permission)
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