By Dec end, Jio may have largest subscriber base topping 375 million: Nitin Soni, Fitch Ratings
Fibre broadband is going to be a significant part of Rel Jio revenue and EBITDA generation.
How have you analysed Jio’s performance? Would you say this is a beat?
It is a very impressive performance. They have crossed the 350 million mark on subscribers. Jio has been adding about 8 million subscribers a month while Vodafone-Idea is losing about 1% of the subscriber base every month. Their quarterly EBITDA has improved now to Rs 5,000 crore and a consistent EBITDA margin of 41-42%. That is above our expectations.
All in all, it is a phenomenal execution of the market to gain larger subscriber and revenue market share. By the end of December, we expect Jio to have the leading subscriber base in the industry crossing the 375 million, which IDEA has right now and revenue market share will be close to 40% by December, if not early.
375 million is the next number you are watching out for, from 355 odd right now. How do you see the trajectory on the ARPU front? After some gains, they seem to have seen some pressure at Rs 120 this quarter. How do you see that continue from here on?
What is happening in the market is that when both the incumbents Vodafone-Idea and Bharti introduced the minimum recharge plan, that triggered a wave of movement of subscribers from the incumbents’ network to Jio’s network and that is why Jio has been gaining about 8 million subscribers a month. We believe a good part of incremental subscribers are coming from the rural side or tier II, tier III cities. That is leading to the ARPU number at Jio pretty much flat. Last quarter, it was Rs 122, while there has been a slight improvement in ARPU for the incumbents because they are losing the low base ARPU subscribers.
But going forward, as now Jio has started charging 6 paise per minute on their voice calls. That will also lead to a bit of a higher ARPU in the next quarter. Going forward as more and more low-end subscribers move to the higher ARPU, there would be a gradual push to increase ARPU for all the three telcos in the market.
This is the festive season and Mr Mukesh Ambani did guide for the POS terminals for the kirana shops to hit in a big manner. The announcement is expected any time soon. The business will also be connected and actually be captured in Jio. What kind of volumes have you built in in your own model for next couple of quarters? What kind of boost will Jio business get because of that?
We have not gone into so much detail on that segment but in my estimate, it would not be that big a business, compared to the revenue and EBITDA, the mobile segment is generating. The segment which we are analysing more in detail is the fibre broadband because that is going to be a significant part of the revenue and EBITDA generation and that is a sticky business.
As and when they expand in the market and connect more residential subscribers to their network, it will be another booster for their revenue and EBITDA generation.