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Jio reports 23% rise in net profit, loses 11 million mobile users

The company said Covid-19 impact in the previous quarter led to a churn of low-end subscribers and resulted in a fall of customer base.

reliance jio, RIL
During the second wave of the pandemic, telecom companies had offered such customers free recharges.

Reliance Jio Platform’s net profit rose 23.4 per cent to Rs 3,728 crore in the second quarter of the 2021-22 financial year (Q2FY22) on a year-on-year basis, driven by better customer mix and increase in data consumption. In the corresponding quarter last year, the company had posted a net profit of Rs 3,019 crore.

Jio, which added 34 million customers in three previous quarters, reported a surprise decline in its customer base in the second quarter. The country’s largest telecom operator blamed “Covid-19 impact” as it lost 11.1 million customers during this quarter on a sequential basis. At the end of Q2, Jio’s subscriber base stood at 429.5 million. This is the first time that the company has reported a sharp sequential drop in customer base. On a year on year basis the subscriber number grew by 23.9 million customers.

Revenue from operations grew 6.9 per cent YoY to Rs 19,777 crore, while earnings before interest, tax, depreciation, and amortisation (EBITDA) rose 16.5 per cent to Rs 9,294 crore. On a sequential basis, revenue and net profit grew 4.3 per cent and 2.1 per cent, respectively. “Our digital services business continues to transform the broadband market in India and set new benchmarks for the industry,” Reliance Industries Chairman Mukesh Ambani said.

Average revenue per user (ARPU) in the second quarter was Rs 143.6, a growth of 3.7 per cent over the previous quarter. While Airtel and Vodafone Idea have taken price hikes in low-end prepaid subscriber packs, Jio has not raised tariff. An analyst said customer churn led to better customer mix, resulting in growth in APRU.

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The company said Covid-19 impact in the previous quarter led to a churn of low-end subscribers and resulted in a fall of customer base. 

During the second wave of the pandemic, telecom companies had offered such customers free recharges.

Consolidation of Sim cards, too, impacted the customer growth. Jio has a policy of keeping such subscribers in its base for about 90 days.

“So, the effect of these people stopping recharging two quarters before is now getting reflected in our subscriber count,” Kiran Thomas, president, Reliance Jio Infocomm, said in the post-results conference call. He added that the fall in customers had zero negative impact on its Q2 financial performance.

Data consumption per user also rose 17.6 GB a month in the second quarter, from 15.6 GB in the first quarter FY22.