The half a percentage point development in Reliance Jio’s net profit is not that exciting. What’s the bad part of the whole thing is that the average revenue per user (ARPU) is the least which is found in the last four quarters. Analysts have even warned that if the average revenue per user does not improve, Jio may go for a tariff hike.
Two other features weighing down on the profit are reasonable postpaid plans and JioPhone, which fascinates low average revenue per user (ARPUs). Both the new phone and the cheaper postpaid plans were launched in Oct-Dec 2020, and they are now weighing down the financials.
Reliance Jio has currently added three times more subscribers between Jan-March 2021 compared to the earlier three months. But most of them are low-paying users, who utilize Jio as a second phone for cheaper plans, and therefore the subscriber addition is now not adding to the revenue or the profit in a big way.
“We believe Reliance Jio should be comfortable taking tariff hike if the current market structure is maintained, wherein it provides more value for money to subscribers compared to peers. This structure would ensure Jio grows its subscribers faster,” stated an ICICI securities report dated 8th April 2021.
