Jio says Arpu is not under pressure. Analysts aren't so sure
Jio says organic Arpu growth is still running at 4-5% without tariff hikes. But analysts warn the easy gains may be over, forcing telcos to look beyond connectivity for growth.
Summary
Jio says organic Arpu growth is still running at 4-5% without tariff hikes. But analysts warn the easy gains may be over, forcing telcos to look beyond connectivity for growth.
Reliance Jio is pushing back against concerns that its average revenue per user (Arpu) is losing momentum, even as the telecom operator's Arpu rose just 0.7% sequentially in the April-June quarter.
Jio Platforms chief strategy officer Anshuman Thakur said the company is seeing 4-5% annual Arpu growth organically without tariff increases, a claim that comes as telecom operators struggle to lift monetization in the absence of a price hike.
“Arpu is not under pressure…In the Arpu mix improving, if you are referring to homes etc, we are promoting that service and therefore the Arpus are not necessarily higher there than mobility. So that is one impact that we see,” Thakur told analysts on an earnings call on Friday after the June quarter earnings announcement.
Arpu is a key telecom metric that reflects the average monthly revenue generated per subscriber and is widely used to gauge monetization and profitability. Telecom operators' Arpu levels have largely remained flat since their last tariff increase in July 2024.
Despite higher data consumption and two extra days in the June quarter, Jio's Arpu rose to ₹215.6 a month from ₹214 in the preceding quarter. On a year-on-year basis, it grew 3.3%.
Thakur, however, said the underlying trend was stronger.
“..As I have spoken in the past as well. On a purely organic basis without any tariff action, having a 4-5% Arpu improvement is what we have seen practically happen on the ground. So, it’s not because of any pressure on the Arpu and that much should happen, I think more or less in a similar trend except that we have some promotion offers going for home at this point in time,” Thakur said.
Arpu squeeze
Analysts are growing more cautious about how much further organic Arpu growth can go. Smartphone prices, particularly at the entry level, could slow feature-phone-to-smartphone upgrades and weaken the premiumisation trend, brokerage CLSA said in an 11 July note.
“Organically, whatever Arpu growth could have happened is already done. Without a tariff hike, telcos cannot hold it for long. Given 5G monetisation is also not there, they will have to recoup their investments,” said Faisal Kawoosa, founder and chief analyst at technology consultancy Techarc.
Jio is not alone in facing a tougher Arpu environment. Airtel's Arpu fell ₹2 to ₹257 in the March quarter; the company is yet to report its June-quarter results.
Telecom operators last raised tariffs in July 2024 after a gap of more than two years. Reliance Jio led the increase with a 12-25% price hike, after which operators also phased out their entry-level plans in 2025.
Beyond connectivity
Jio Platforms, which filed its draft red herring prospectus with the Securities and Exchange Board of India (Sebi) last month for a proposed initial public offering, is also looking to grow revenue from businesses beyond connectivity.
Its digital services business grew 20% year-on-year in the June quarter, outpacing the 11% growth in the core connectivity business. Growth was driven by content, cloud compute and internet of things (IoT).
Thakur said there was further scope to monetize digital services, which generally offer higher margins than traditional connectivity. Current margins are lower because of ongoing investments, but the creation of intellectual property could allow revenue to grow without a proportional increase in costs, improving profitability over time.
“I think telcos are looking at growing their revenue share from non-connectivity businesses such as data centres, other digital services. But at the same time their core connectivity business needs tariff hikes for sustainability,” Kawoosa said.
Jio Platforms reported a 9.2% year-on-year rise in net profit to ₹7,764 crore in the June quarter. Profit fell 2.15% sequentially, however, amid higher finance costs and depreciation as 5G network assets became operational. Revenue from operations rose 2.4% sequentially and 12% year-on-year to ₹39,173 crore.
The company said revenue growth was driven by subscriber additions, organic Arpu growth and digital services.
About the Author
Jatin Grover
Jatin is based in New Delhi and writes on telecom and technology with a keen interest in policy and regulation. With over five years of reporting experience across Informist Media, Financial Express and now Mint, he has extensively covered the telecom, information technology, electronics and semiconductor sectors.
A commerce graduate, Jatin's work focuses on tracking industry developments, regulatory changes and policy decisions that shape India’s evolving digital ecosystem. Over the years, he has reported on key trends and shifts across these sectors, bringing clarity to complex policy and business issues.
Known for his strong news sense, Jatin focuses on breaking stories and delivering in-depth reporting that offers readers an understanding of complex topics, policy decisions and corporate developments. His work often examines the intersection of policy and business, highlighting how regulatory decisions impact industry strategy, pricing, and consumer outcomes.
He brings a strong domain understanding for Mint and his work is widely picked up by other media firms. With a focus on accuracy and depth, he aims to break down developments into clear, accessible insights for readers, while continuing to track emerging trends shaping the future of India’s telecom and technology sectors.
Source: Livemint — Companies
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