Jio reports lower-than-expected loss, may report profit in Q3

Reliance Jio, which today stumped analysts with a low Rs 270.6-crore net loss in its maiden standalone financial numbers against market expectations of around Rs 2,000 crore, hinted that it may turn in the first post-tax profit in the December quarter.

The latest entrant into the competitive telecom space said its average revenue per user or Arpu at Rs 156.4 is the highest in the industry, even though it's offering 84 days of discounted validity on an 28 days recharge.

Jio began commercial operations with hours of free data and voice last September and has garnered 138.6 million customers so far, of which around 108 are active. But only under-2 per cent of total customers are post-paid, it said.

"We've the highest Arpu in the industry at Rs 156.4 and we've net added 15.3 million customers and our attrition in Q2 was only 1 per cent. Also, I don't see any reason that these present run-rates will decelerate or has already peaked," RIL group deputy chief financial officer V Srikant told reporters when asked whether Jio will report profit in the December quarter.

He parried a direct answer saying the company doesn't make any forward-looking statements.

It can be noted that many market watchers were expecting Jio to report around Rs 2,000 crore loss in Q2.

Anshuman Thakur, head of strategy and planning at Jio, chipped in saying, "even though we offer a 28-day valid recharges with 1 GB data per day for Rs 399, effectively a customer gets to use the same facility for 84 days. As this offer will come to an end by November, we should be getting a better picture on our revenues then. Plus benefit of IUC cut from 14 paise to 6 paise per call will have to be considered." Srikant also attributed the better margins and faster turnaround to the technological superiority of that Jio has over the rivals, saying "LTE is the most efficient technology available in the segment now. Also look at our sheer scale which we can leverage."

In Q2, Jio paid Rs 2,000 crore in IUC,Thakur said, adding benefit of lower ICU, which came into force from October 10, depends on the rise in voice calls.

Joi said its consolidated value of services stood at Rs 7,213 crore while consolidated EBIT stoodt at Rs 261 crore.

Revenue from operations stood at Rs 6,147 crore and standalone EBITDA at Rs 1,443 crore with an EBITDA margin of 23.5 per cent making its standalone EBIT at Rs 260 crore and EBIT margin at 4.2 per cent.

Total wireless data traffic stood at 378 crore GB and the average voice traffic at 267 crore minutes per day.

Srikant said Jio has capitalised around Rs 90,000 crore of equity while it has a Rs 49,000 crore on debt its book. It also has Rs 22,000 crore of deferred payments pending with government. Total investment into Jio so far is Rs 1.49 trillion and has Rs 62,000 crore in capital work in progress.

Jio spent Rs 670 crore in servicing its debt during the quarter, Srikant added.

Total debt of the group rose to Rs 2.14 trillion from Rs 1,96,601 crore in March 2017, while cash in hand inched down to Rs 77,014 crore from Rs 77,226 crore. RIL's standalone debt rose to Rs 1.37 trillion from Rs 1.28 trillion.

Of the Rs 8,109 crore net reported in Q1 at the consolidated level, Rs 2,317 crore came from treasury income, which rose from Rs 2,124 crore in the June quarter, but down from Rs 2,393 crore a year ago.

Srikant said having almost done with the petchem and telecom expansions the capex cycle has peaked for the group with Q2 capital spending coming crashing down to around Rs 16,000 crore in Q2 from Rs 25,000 crore in Q1.

Of total capex, Jio eat up around Rs 7,000 crore and going forward in the second, it will remain at that level, Srikant said.

Jio provided for Rs 1,500 crore in depreciation and amortisation and may for the full year the same may rise to Rs 4,500 crore, he said.

Thakur said Jio sold 6 million bundled smartphones in the quarter and when asked where has the Rs 1,500 each collected from phone buyers as a refundable deposit, Srikant said this has been accounted as liabilities.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)