JIO’s 2.5% QoQ Ebitda growth in Q3FY24 was in line with estimates. Analysts of IIFL Capital Services estimate that mobile revenue growth was 2.4%, entirely driven by subscriber growth. JIO has achieved it’s the targeted pan India 5G coverage. Analysts of IIFL Capital Services estimate that with 5G equipment installed on ~55% of its 4G tower footprint, it has covered a significant proportion of the revenue-relevant population. They expect Bharti to cover 40-45% of its towers with 5G by FY24-end. Despite rapid 5G rollout, JIO’s NW opex and interest expenses have been steady, suggesting that these are largely capitalised. Analysts of IIFL Capital Services continue to build in 4G prepaid tariff hikes in H2FY2024. JIO would focus on FWA rollouts in 2024. Analysts of IIFL Capital Services largely maintain their estimates and US$96bn Mar’25 EV.
Revenue growth entirely subscriber led; S&D costs spike:
JIO’s reported revenue grew 2.5% QoQ and Analysts of IIFL Capital Services estimate 2.4% mobile revenue growth. Analysts of IIFL Capital Services estimate that JIO’s mobile PB/day at 313 grew 3.4% QoQ, healthy albeit at a slower pace than recent quarters. Rising S&D costs (up 17% QoQ and 2.5x of FY22 average) are a cause for concern, as the industry seems to have again stepped up MNP payouts after a lull.
Key takeaways from analyst briefing:
1) 5G network carries ~25% of mobile data traffic, suggesting 5G resulting in de-bottlenecking of 4G capacity in hot-running sites. 2) JIO AirFiber (FWA) is now available in 4,000+ cities/towns, with pan India coverage targeted by H1CY24. 3) Content bundling has driven ~30% higher per capita data usage on FWA vs FTTH. With FTTH seeing 300GB monthly per capita usage, analysts of IIFL Capital Services estimate 400GB for FWA. 4) Enterprise segment has seen improved traction.
Analysts of IIFL Capital Services maintain estimates and US$96bn EV:
Analysts of IIFL Capital Services expect tariff increases in H2FY2024. Introduction of daily data allowances on 5G plans (currently telcos offer unlimited 5G data on plans priced >= Rs239) is a few quarters away, in their view. Analysts of IIFL Capital Services blended (mobile + FTTH) ARPU estimates for FY24/25/26 are Rs181/Rs198/Rs217. Analysts of IIFL Capital Services project 19% Ebitda Cagr over FY23-26 led by ARPU improvement and market share gains. While 5G accrual capex has peaked in FY24, they expect cash payouts to peak in FY25 as capex creditors wind down.
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