Jio's accelerated Q4 subscriber net adds positive surprise; implies strong uptick in Feb, Mar: Analysts

Reliance Jio's strong subscriber net adds of 15.4 million in Q4 FY21 has thrown up a positive surprise after the slowdown seen over the previous quarter and implies a strong uptick in February and March, alongside role of new JioPhone offer, many analysts said.

ICICI Securities, however, flagged ''multiple misses on the revenue front'', and said revenue growth failed to impress.

On the subscriber front, UBS in its note said that Jio's ''strong'' user addition this quarter is a positive sign after recent deceleration in growth and shows market remains resilient after the initial slowdown in Q1FY21 due to COVID.

Jio's Q4FY21 revenues were down 5.7 percent sequentially with Average Revenue Per User (ARPU) declining 8.5 percent quarter on quarter from Rs 138 due to the removal of interconnect charges (IUC) in Q4, it observed.

''Jio added 15.4 million subscribers in Q4FY21; a significant improvement after the slowdown witnessed over the previous three quarters; the company added 10.8 million, 7.3 million and 5.2 million subscribers in Q1, Q2 and Q3, respectively,'' UBS analysis said.

Since sector regulator's data shows that Jio added only 2 million users in January 2021, the latest Q4 report card implies that a strong uptick occurred in February and March.

UBS said that the impact of the ongoing second wave of COVID-19 on subscriber additions will be a key monitorable going ahead.

Highlighting the ''material pick up'' in Q4 net adds, Credit Suisse said the new JioPhone offer launched in end February-2021 could have played some role.

Goldman Sachs, in its report on Monday, said it expects Bharti's over six percent sequential revenue growth in 4QFY21 (excluding IUC impact) to outpace that of peers, but added that with the re-launch of JioPhones from March 2021, Jio will likely take a lead in subscriber additions going forward.

''We forecast Bharti and Jio's revenue growth to be broadly similar going forward (low-single-digit quarter-on-quarter growth without a tariff hike), but expect both the telcos to continue to win market share versus Vodafone Idea, given the latter's stretched balance sheet,'' Goldman Sachs argued.

While it expected moderation in subscriber adds in the June quarter, it believes that revenues may stay largely flat in June verses March quarter for telcos.

''Having said that, with this note, we push out our wireless tariff hike assumptions to H2 CY21 (earlier H1 CY21), resulting in cuts to our FY22 revenue estimates for telcos...,'' Goldman Sachs said. Jefferies opined that Jio had ended FY21 on a strong note and that strong subscriber additions surprised positively. IIFL Securities said ingredients were in place for subscriber acceleration.

ICICI Securities took a view that Reliance Jio Infocomm (RJio) had ''multiple misses'' on the revenue front in March quarter.

''...underlying revenue growth was just 1.7 percent QoQ (quarter on quarter), slowest since commercial launch; adjusting for FTTH (fibre to the home), mobile revenues grew by just 1 percent, and digital revenues (Jio Platforms consolidated minus RJio) dipped 6.4 percent QoQ. Though the company had strong subscriber addition of 15.4 million, they would have come at low ARPU, restricting revenue recovery,'' it felt.

Jio Platforms on Friday posted a net profit of Rs 3,508 crore for the fourth quarter ended March 2021, up 47.5 percent over the year-ago period as it logged ''healthy'' customer adds, although IUC-regime (interconnect usage charges regime) transition pushed down average revenue per user to Rs 138.2.

Jio Platforms -- the unit that holds telecom and digital businesses -- saw revenue from operations rising to Rs 18,278 crore, up almost 19 percent compared to the corresponding period previous year. Jio, India's youngest but largest telecom operator, had said it now has a strong spectrum footprint, spruced up by recent buys, to address the next 30 crore subscribers.

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