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Reliance Jio Infocomm’s (RJio) revenue grew 9.9% YoY, helped by rise in mobile subs base, faster growth in FTTH and higher enterprise (incl. ILD) revenue. EBITDA was up 14.7% YoY, aided by lower SUC (which added to EBITDA growth by 4.2% YoY). RJio remains confident of driving higher revenue growth led by: 1) adoption of 5G services, hence higher data usage; 2) FTTH subs growth boosted by JioFiber Backup plan; and 3) continued growth in enterprise business. However, we see near-term challenges to EPS growth with rise in costs due to higher network charges, rise in D&A on capitalising 5G spectrum and network investment, and higher interest cost (on 5G capitalisation). RJio said it has completed 65% of its planned 5G rollout with 115k sites, which implies significantly lower 5G deployment vs 4G. We have reduced our EBITDA estimates by ~1.5-3% for FY24E/FY25E.

RJio revenue up 9.9% YoY to INR 240bn in Q1FY24

This was driven by subs growth of 6.8% YoY (net add: 9.2mn) to 449mn, and ARPU growth of 2.7% YoY to INR 181. Company benefited from: 1) strong growth in FTTH subs base (est. 50% YoY to 9mn), which has higher ARPU vs mobile subs; 2) higher mix of ILD revenue, which is indicated by 25% rise in access charges; and 3) stronger growth in enterprise business, which includes connectivity solutions (including SD WAN, cloud, IOT, etc). We anticipate ARPU growth to be higher in FY24E and FY25E aided by tariff hikes, which we believe is not completely baked into our estimates. Churn rate has slightly dipped to 1.8% (vs 2% in Q4FY23) and gross adds were somewhat lower at 33.2mn (vs 35.2mn in Q1FY23) due to reduced on-ground competitive intensity. Minutes grew 7.2% YoY to 1,340-bn, and data usage was up 28.2% YoY to 33,200-bn MB. Data usage growth was also aided by fast growth of FTTH subs who use higher data quantity. Also, free IPL available on JioCinema has helped.

EBITDA grew 14.7% YoY to INR 126bn

Network costs rose 7.8% YoY to INR 74bn and may rise further over the next two years due to: 1) commercial launch of 5G services, which is seeing rapid rollout; and 2) increased rollout of JioFiber will help charge more rental cost add to P&L. SG&A expenses grew 23.5% YoY to INR 11bn. Employee costs increased 19.8% YoY to INR 4.4bn. License fees and SUC dipped 13% YoY to INR 22bn as RJio benefited from lower-weightage SUC charge (as % of AGR) on purchase of 5G spectrum. D&A rose 22% YoY to INR 52bn, partially on deployment of spectrum bought in Mar’21, higher lease liability recognition and higher data utilisation. Interest cost dipped 2.6% YoY to INR 9.7bn as interest on 5G spectrum is not charged to P&L. Net profit grew 12.2% YoY to INR 48.6bn.

Jio Platforms’ revenue rose 31% YoY

Revenue of Jio Platforms (standalone, which houses most digital properties of the company) grew 31% YoY to INR 20bn in Q1FY24 due to technology support to JioCinema for broadcasting IPL. EBITDA jumped 20% YoY to INR 4.5bn. Net profit rose 20.5% YoY to INR 2.4bn due to lower effective tax rate at 27.9% (vs 29.6% in Q1FY23).

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