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Jio's gross subscriber additions, though down 14 per cent QoQ, were still healthy at 26.7 million due to continued traction on new JioPhone offer, foreign brokerage, Jefferies said in a report.

This along with lower churn, resulted in 14.3 million net additions in Q1. Assuming 0.6m additions on Jiofiber, Reliance Jio added 13.8m mobile subscriber on net basis which surprised positively given 1Q was impacted by Covid.

"We expect Jio's subscriber additions to remain robust led by recent capacity additions, JioPhone offers and launch of JioPhone Next", the report said.

Jio reiterated that its device and capacity strategy is in place to gain the next 200m subscribers. "We marginally tweak estimates to factor the results and see Jio gain 530m subscribers by Mar-24. Over FY21-24, we expect RJio to deliver 15% CAGR in revenues and 20% Cagr in profits. We maintain our valuation for RJio at US$90bn", the report said.

Blended ARPUs at Rs138 were flat QoQ, marginally below estimates. With share of JioFiber rising in total revenues every quarter, stable blended Arpus imply that mobile Arpus would have fallen QoQ, This would be largely due to bulk of the subscriber additions taking place in the lower ARPU feature phone segment. With Jio's subscriber mix shifting towards JioPhone, ARPUs are likely to be lower, the report said.

The sharp increase in data usage is attributable to JioFiber subscriber whose avg. data usage is 300GB/month. Limited benefits of operating leverage seen. Despite healthy growth of 4% QoQ, Reliance Jio's margins were flat QoQ at 48%. Reliance Jio's incremental Ebitda margin was low at 51% due to sharp rise in license fee (+9% QoQ) and network operating costs (+4% QoQ).

As highlighted in our analysis of Jio's FY21 annual report (link), Jio is yet to recognize the entire Fiber usage charges it incurs. As it does that, its network operating costs should rise sharply and keep incremental margins lower than 60-70% seen usually in telecom businesses, it added.