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Reliance Jio Platforms (JPL), the entity encompassing Reliance Industries' telecom and digital operations, announced a substantial 26% year-on-year increase in net profit for the third fiscal quarter. This remarkable growth can be attributed to a confluence of factors, primarily the tariff hikes implemented in July 2024, a significant influx of new subscribers, and a notable surge in data consumption. The strategic price adjustments resulted in a 4.2% quarter-on-quarter increase in average revenue per user (ARPU), reaching ₹203.3. However, analysts predict that the complete financial impact of these tariff hikes will unfold gradually, with the full benefits anticipated to materialize across the fourth quarter of fiscal year 25 and the first quarter of fiscal year 26. This staggered effect is primarily due to Jio's higher proportion of subscribers enrolled in longer-validity plans compared to its competitors, Bharti Airtel and Vodafone Idea. The company's consolidated net profit for the December quarter reached ₹6,861 crore, a substantial increase from ₹5,447 crore in the same period the previous year and a slight improvement over the ₹6,539 crore recorded in the preceding quarter. This strong financial performance is further corroborated by a 19.41% year-on-year growth in operating revenue, reaching ₹33,074 crore, reflecting the continuous expansion in data usage and the increasing adoption of Jio's 5G-based fixed wireless access (FWA) services.
The remarkable success of Jio's digital services division is primarily attributed to the consistent addition of new subscribers and a sustained improvement in key customer engagement metrics. Mukesh Ambani, chairman and managing director of Reliance Industries, highlighted the significant role played by 5G upgrades and the expansion of Jio's market share in the home broadband sector. The company recorded a record-breaking quarter for home connections, adding 2 million new subscribers. This impressive growth contrasts sharply with the customer losses experienced in the second fiscal quarter, which were largely due to price-sensitive customers switching to the state-run BSNL. BSNL, however, did not increase its tariffs last July, leading to a rapid return of these customers to Jio following challenges in network quality and the lack of comparable 4G services. Jio proactively took the initiative in implementing tariff hikes ranging from 12% to 25% for most of its user base, a strategy aimed at strengthening the ARPU. This initiative was crucial given the current inability to fully monetize 5G services, despite the substantial investments made in acquiring airwaves and deploying a nationwide 5G network. The strategic tariff hikes demonstrate Jio's proactive approach to maximizing revenue and profitability in a competitive market.
JPL's earnings before interest, tax, depreciation, and amortization (EBITDA) also experienced significant growth, rising by 19% year-on-year to ₹16,585 crore in the December quarter. This increase aligns with the overall revenue growth. However, the EBITDA margin saw a slight decrease of 30 basis points to 50.1%, compared to the previous year. Analysts attribute this marginal reduction to increased operational costs. Reliance Jio Infocomm, the leading telecom operator in India and the core component of JPL's operations, reported equally impressive results. Its net profit for the December quarter experienced a 24% year-on-year increase, reaching ₹6,447 crore, with a 16% growth in operating revenue, amounting to ₹29,307 crore. Although these results showcase significant financial strength, the net profit slightly underperformed the average analyst estimates compiled by ET, which stood at ₹6,718.5 crore. This suggests that while Jio's strategic adjustments have delivered substantial growth, there remains room for further optimization and leveraging of its 5G infrastructure and growing subscriber base to fully meet market expectations. The long-term outlook for Jio Platforms remains positive given the ongoing expansion of 5G, increasing data consumption, and further potential for ARPU growth through targeted strategies.
Source: Surge in tariff, users and data lifts Jio Net up 26%