What’s behind Reliance Jio’s surprise Arpu, revenue and profit?
But the mystery surrounding Jio’s finances remain, with reported revenue and operating profit being far higher than what the Street had anticipated. The biggest surprise was the reported average revenue per user (Arpu) of Rs156.40 per month.
Jio’s current flagship plan entails an outgo of Rs399 for a period of 84 days, which results in an Arpu of around Rs122 net of tax. Tariffs were even lower in earlier months.
It appears that revenues on account of an earlier scheme—Summer Surprise—have been accounted for largely in the September quarter, even though payments were made in March and April. This is because of the manner in which the scheme was structured—those who signed up got the first three months’ services for free and then had to pay Rs303 to avail of services in the fourth month. So while effectively Arpu for this customer would be around Rs72, customers for whom the fourth month’s services happened to start in July, the revenues that were factored in would be Rs263 (net of tax). This would apply to a large portion of users at the time, since Summer Surprise applications picked up around end-March and peaked in early April.
“This quarter there is revenue coming from the previous quarter. We have said that it’s three months of free service and one month of charged service. So for those customers their entire revenue is coming in,” said Anshuman Thakur, head of strategy and planning at Reliance Jio.