Reliance JIO’s Q3FY20 revenue growth (6.4% QoQ versus 12.6% estimate) was underwhelming due to low subscriber addition and muted ARPU increase.

RJIO introduced IUC tariff from October 10, 2019, in response to TRAI’s proposal to extend the IUC sunset date. This resulted in heavy voice users abandoning its network. Consequently, RJIO added only 14.8mn subscribers on net basis in Q3FY20 versus 23.9mn in Q2FY20, which is a seasonally weak quarter. On gross basis, however, it added 37.1mn subscribers versus 31.6mn in Q2FY20 as it slashed Jio Phone prices to INR699 from INR1,100.

Implementation of IUC helped RJIO become net receiver of IUC with the incoming-outgoing ratio at the end of the quarter at 52:48 from 38:62 earlier. This resulted in 90bps QoQ increase in EBITDA margin to 40% despite 30bps QoQincrease in network cost.

The Supreme Court has dismissed telecom operators’ plea regarding AGR liabilities. This can benefit RJIO given minuscule AGR liabilities and strong network capacity.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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