They added that Jio’s low (1.3 million net) mobile user additions despite it not raising tariffs for feature phone users last July was a “negative surprise”.
Analysts, though, said the strong traction of Jio’s home broadband services business, propelled by decent AirFiber user adds in Q3FY25 is an encouraging trend and would see further growth in coming quarters. “Jio’s earnings before interest, tax, depreciation & amortisation (Ebitda) at ₹15,500 crore in Q3FY25 missed estimates due to a 55% sequential jump in access costs. Net profit too missed estimates due to lower margins and slightly higher D&A (depreciation & amortisation) and interest costs,” Jefferies said.
Analysts said the 30 bps (basis points) margin contraction to 52.8% was due to a sharp rise in Jio’s access costs, while the 7.3% on-quarter rise in sales & distribution (S&D) costs in Q3FY25 underlined that telcos continued to incentivise mobile number portability through elevated channel payouts.
ICICI Securities, though, said expansion of Jio’s 5G-based fixed wireless access (FWA) services business is impressive since over 70% of customer additions in Q3FY25 came from beyond the top 1,000 cities, which underlines pent-up demand for fixed broadband. Jio added two million home broadband users in the October-December period, its highest-ever in a quarter, led by improved traction in the FWA segment.
Analysts added that Jio’s enterprise services business too saw improved traction, led by a 280% on-year jump in large government contracts. Goldman Sachs estimates that the fibre-based home broadband and enterprise businesses together contributed about 9% of Jio’s 3QFY25 revenues.Analysts, though, expect Jio’s D&A costs to keep mounting in coming quarters as the telco commercialises the 5G spectrum.Jefferies expects Jio to deliver 18%/22% growth in revenues/Ebitda compounded annually through FY25-27, amid rising mobile tariffs and scale-up of its home broadband business.
Over FY25-27, it also expects Jio’s ARPU to rise at 12% CAGR to ₹245, led by two potential tariff hikes of 10% each in 2QFY26 and 2QFY27. It has pegged Jio’s current enterprise value at $132 billion.
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