Analysts believe the average revenue per user (ARPU) of Reliance Jio is declining and may even fall below that of Airtel, something very few would have expected. ARPU is the parameter used to measure the performance of a telecom service provider. In the last six quarters, Jio’s ARPU has been steadily dropping, from a high of Rs 156 to Rs 126 and now for the last April-June 2019 quarter it may turn out to be Rs 124.
One explanation being cited for this is that Jio has been pursuing customers in the tier 2 and tier 3 towns where the revenue for VoLTE services don’t amount to much. When the new subscriber additions are in the Rs 99 range, it pulls down the average.
Going ahead the trend may not alter dramatically unless the company plans to make any changes in the tariff, something very unlikely to happen with Reliance.
Analysts are able to come up with an explanation for Airtel’s ARPU being steady at Rs 127, a tad higher than Jio’s latest quarterly figure. According to them, Airtel managed to shed a lot of customers who were in the low bill regime and introduced a minimum recharge limit.
However, from the financial performance perspective, Reliance Jio Infocomm may still post better figures, thanks to the asset restructuring the company carried out transferring the assets to two SPVs, both trusts sponsored by a RIL company Reliance Industrial Investments and Holdings. These assets primarily comprised the tower network and fibre network. The subscriber network has been growing steadily for Jio.
The projections for the company’s net profit are that it may jump 88% year-on-year. The quarterly figures too are likely to throw up impressive growth, for the seventh time in a row. There is however some difference in the way the quarterly results are being seen by two analysts, Axis Bank and Morgan Stanley. While Axis Bank predicts that it would be Rs 1,148 crores a 37% increase, Morgan Stanley believes it will drop to Rs 756 crore. The estimates on the quarterly subscriber growth varies between 23 and 25 million.