Markets

RIL Q3 net rises 25.1%; Jio turns profitable

RIL Q3 net rises 25.1%; Jio turns profitable

Reliance Jio might be offering the cheapest data service among all telecom operators in the country, but it is also turning out to be a profitable business model for Mukesh Ambani-led Reliance Industries.

As the latest entrant to India's highly competitive telecom sector after its launch in September 2016, Jio shook up the market and sparked a price war by offering free voice calls for life and drastically reduced tariffs.

Reliance Jio, which has subscriber base of 16.01 crore, clocked profit at Rs 504 crore for the December quarter against loss of Rs 271 crore in previous quarter. Reliance, India's largest listed company by market value, said its consolidated net profit rose about 25 percent in the quarter from a year earlier to a record 94.23 billion rupees.

The company's gross refining margin, the profit earned on each barrel of crude processed, was $11.6 per barrel for the December quarter, outperforming the benchmark Singapore complex margins by $4.4 per barrel. This positions the business as one of the key profit drivers for the company in the coming years.

The highlight of the quarter was that Reliance Jio, the conglomerate's mobile telephony and digital services business turned in a net profit on only the second quarter after commencing commercial operations.




Jio's average revenue per user (ARPU) stood at Rs 154, even as Bharti Airtel's ARPU declined to Rs 123 during the same period. This increase is primarily due to lower capitalization of finance cost related to commencement of digital services business (Rs. 712 crore) and higher loans balance partially offset by exchange rate variation during the quarter.

"Our refining business has delivered 12 consecutive quarters of double digit refining margins, demonstrating operating excellence and healthy industry fundamentals".

For the quarter ended 31st December 2017, RIL achieved revenue of Rs. 109,905 crore ($ 17.2 billion), an increase of 30.5% as compared to Rs. 84,189 crore in the corresponding period of the previous year. "Also, the benefits of large investments in the petrochemical business are beginning to show with the segment reporting its highest ever earnings", Ambani said.

The refinery segment contributed ₹75,865 crore to the topline and ₹6,165 crore to profit before interest and taxes (EBIT), while petrochemicals contributed ₹33,726 crore to the topline and ₹5,753 crore to EBIT. EBITDA stood at Rs 2,628 crore, up 82.1% sequentially. The company added a data subscriber base of 160 million by December. "Jio has demonstrated that it can sustain its strong financial performance", he added.

"Jios strong financial result reflects the fundamental strength of the business, significant efficiencies and right strategic initiatives".


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