Reliance Jio Infocomm had made headlines in January this year when it had declared a profit in its third quarter results, just 16 months after its launch. According to analysts, its January to March quarter results for the last financial year may not show much of a change in terms of net profit, but the telecom disruptor will continue to give a tough competition to older rivals like Airtel and Idea Cellular.
According to The Economic Times, analysts predict that Jio's Q4FY18 net profit will remain flat sequentially at around Rs 504 crore, courtesy an around 3 percent rise in revenue to Rs 7,100 crore. Operating income is pegged to grow 1.6 percent quarter-on-quarter to Rs 2,670 crore. The robust subscription to its loyalty programme Prime, meanwhile, is likely to continue. ICICI Securities reportedly estimates Jio's Prime membership revenue to jump as much as 80 percent to Rs 900 crore in the March quarter, up from Rs 500 crore in Q3.
On the flip side, it expects Jio to report "an 11.1 percent sequential fall in average revenue per user (ARPU) to Rs 137 in the March quarter from Rs 154 in the October-December period", triggered by the sharp cut in its base offer to JioPhone users at Rs 49 per month and users moving to lower-priced bundled plans. Its Ebitda margin is expected to slightly dip too.
Despite this Jio is expected to continue to outperform its rivals. Shockingly, Airtel, the country's leading telco, is likely staring at its first quarterly net loss in 15 years. Jio's latest round of price-cuts in January, the impact of the recent 43 percent drop in international termination charges and continuing ARPU downtrading are all expected to cause a sharp revenue decline for Airtel as well as the other incumbents in the last quarter of 2017-18.
Significantly, the brokerage reportedly sees Jio's subscriber base increasing to 185 million in its Q4 results, a whopping 15.6 percent sequential jump over the previous quarter.
So how long is Jio going to continue with its disruptive pricing? "As the market heads towards a three-player structure (amid ongoing sector consolidation), Jio's behaviour would change once it approaches 30 percent RMS [revenue market share], which may happen by end-FY19, and could be a point at which we would expect slightly less price competition in the market," Rajiv Sharma, HSBC director and telecom analyst, told the daily. Jio's current revenue market share is reportedly around 15 percent. – Business Today