Reliance Jio Infocomm Ltd, India’s largest and only profitable telecommunications operator, reported a 62.5 percent year-on-year increase in net profit for the December quarter to some 1,350 crores, backed by its move from free voice calling to impose user charges for calls made to other operators.
The company’s operating revenue rose 28.3 percent y-o-y to approximately 13,968 crores, while its average revenue per user (Arpu) increased to approximately 1128.4, despite consecutive declines in the last seven quarters, following its decision to charge 6 paise per minute for calls made to rival networks. As of December-end, it had 370 million subscribers.
Arpu is the operator’s total revenue divided by its network’s number of users or connections. Jio’s Arpu steadily declined from < 154 in the quarter of December 2017 to ~120 in the quarter of September 2019.
Jio said on 10 October that it would charge users 6 paise a minute for calls made to other networks to compensate for interconnecting usage fees (IUC) that it would have to pay to rival operators.
The operator said in October that it “had been forced, most reluctantly and eventually” to make the shift after the decision of India’s Telecom Regulatory Authority (Trai) to revisit the date for the scrapping of IUC from 1 January 2020 resulted in regulatory uncertainty. “Jio became a net recipient of access charges within two months of the introduction of IUC tariffs, with outgoing traffic in total off-road.
This was paired with the related removal of overly heavy voice users, with the underlying churn remaining stable, “Jio said on Friday. The average data consumption per user per month was 11.1 GB and the average voice consumption was 760 minutes per user per month, Jio said.
Airtel and Vodafone Idea have yet to release their December Quarter financial results.
Arpu’s Rival Airtel dropped from € 129 in the June quarter to € 1128 in the September quarter. For the September quarter, Vodafone Idea’s Arpu was ~107.
The loss of Vodafone Idea during the quarter of September stood at about 50,922 crore— the highest in corporate history in India. At about 23,045 crores in the quarter ended September, Airtel also recorded its highest quarterly loss in 14 years.
After the Supreme Court upheld the definition of adjusted gross revenue (AGR) by the Department of Telecommunications, the companies reported record losses for setting aside money to pay government license fee dues.
According to the DoT, AGR includes all of a license holder’s revenue, including that from non-core telecom operations such as rent, dividend, and interest income. License and bandwidth charges are measured respectively at 8 percent and 3-5 percent of AGR.
Although its competitors face enormous AGR duties, Reliance Jio has become India’s number one telecommunications operator by both subscriber base and revenue market share, achieving the feat in just over three years of start-up. The Mukesh Ambani-led company added 5.6 million mobile subscribers in November, taking its total user base to 369.93 million, and replacing Vodafone Idea as the country’s largest mobile service provider by subscribers, data released by the sector regulator on Thursday showed.
With this, Jio has a 32.04 percent share in the Indian mobile services market of over 1.15 billion subscribers.
