Jio has admitted that the post-paid market remains difficult to crack due to high customer inertia and customers long-term relationships with the older telcom companies. Lack of international roaming partnerships is also a key factor.
Industry observers feel that other telecos would gain from any potential price hike by Reliance Jio. Jio clarified that most of the infra usage charges paid to the fibre SPV have been capitalised as the fibre assets are mostly allocable to the FTTH (Fibre-to-home or home broadband) business.
As per ARPU (Average Revenue Per User), slowing sales of JIO 4G feature phone and Brookfield’s Rs 25,000-crore investment in the tower asset are likely to prompt Jio to stick to low prices for the next few months.
Jio’s net profit climbed 46% to Rs 891 crore in the quarter to June, roughly Rs 800 crore estimated by the markets. Its ARPU a key performance metric though fell for the sixth successive quarter to Rs 122 from Rs 126 in the previous three month.
IIFL said revenue of Rs 11,679 crore was a growth of 5% sequentially or a daily revenue run-rate (DRR) growth of 4%, but marked significant slowdown from recent quarters. Jio’s capacity constraints in urban areas have perhaps contributed to the revenue slowdown.
Analysts said the company’s reasons behind the 3.3% on quarter ARPU decline, included higher adoption of longer term value packs, cash-backs of Rs 51 on increasing digital recharges and continued addition of low revenue generating JioPhone users.