Company insights – 4Q2020
Reliance Jio successfully achieves growth in their quarterly revenues, with an increase of 38% in Y-o-Y comparison from 4Q2019 to 4Q2020. The company’s sales revenue touched USD 3.1 billion in 4Q2020, with an increase in net profits from USD 185.9 million in 4Q2019 to USD 479 million in 4Q2020. The rise in profits is attributed to an amelioration in Reliance Jio EBITDA margins.
Table 1 below indicates the quarterly revenue in USD:
Source : Reliance Jio Financials
|Revenue||3.14 billion||2.26 billion||38.8%|
|Net profit||0.47 billion||0.18 billion||157.7%|
- Mobile: Refers to the revenue generated from SIM card sales and tariffs for prepaid and postpaid plans.
- Fixed: Refers Revenue from fixed line services, VoIP etc.
- International business: Consists of the revenue generated from gateway services and submarine cables used to sell bandwidth to international OTT players. It also includes revenue generated from foreign telcos leasing cables to cater to Indian customers.
- Enterprise services: Refers to Jio Enterprise and server contracts with corporates. Serve Indian customers in the international business vertical.
- B2C: Business to consumer refers to consumer apps and services – JioHealthHub, JioFiber, OTT apps etc.
- Digital services: Offerings in CDN, Cloud computing, IoT, AR, VR.
1. Reliance Jio strengthens foothold with investments from global MNCs
- Reliance Jio attracted an investment of over USD 13 billion by raising funds for its subsidiary Jio Platforms. USD 6 billion was raised from Facebook for an equity stake of 9.99% whereas Google invested US$4.6 billion for a stake of 7.77% in Jio Platforms. The total amount of stake diluted by Jio Platforms amounted to 32.94%. This investment will support the company in its aim to be debt-free by this year.
- The deal could also increase chances of winning bids for live-streaming sporting events like the IPL (Indian Premier League for cricket). Both Reliance Jio and Facebook bid for live-streaming rights of the IPL in 2017, but neither managed to secure the winning bid.
- The partnership could also ink success for the JioMart platform, as both companies could leverage on each other’s capabilities and resources to tackle Amazon’s hegemony in India.
- Another important implication of this deal would be the liquidity boost for Reliance Jio before the 5G auctions.
2. Significant increase in subscriber base and revenue market share
- The subscriber base for Jio reached 388 million by the end of 1Q2020.
- There was an addition of 17.5 million wireless subscribers over the previous quarter.
- Reliance Jio’s subscriber base is estimated at 410 million as of Dec 31, 2020. This has assisted the revenue market share for Jio to reach approximately 38% as of December 2020, with a 6% increase from December 2019.
3. Strategic diversification of services portfolio by tapping high growth markets
- Jio successfully took the lockdown in its stride by adding customer-relevant service offerings to their portfolio. These include their services in four major segments:
- Online meetings
- Cloud services
- Data centres
- Jio launched its video conferencing platform, JioMeet, in mid-2020. The platform has been kept free for users to this day. The Reliance AGM 2020 was held over JioMeet, and the platform supported over 300,000 simultaneous users.
- Jio struck a partnership with Microsoft to sell their cloud services in India. This opens a plethora of opportunities for the telco to deep dive into the billion-dollar cloud market. While Reliance Jio will be building data centres across the country, Microsoft will offer its cloud offerings of Azure, Azure AI, and Office 365 to SMBs everywhere in the country.
- Jio inked a deal with CISCO, and the two enterprises will be working on setting up mobile CDNs. With video pegged to constitute over 80% of IP traffic in the coming years and the realization of the telco’s capabilities in the network services space, this deal could be a game-changing achievement for both companies.
Reliance Jio is expected to have an operating revenue of USD 3.89billion in 4Q2021 and a subscriber base of 470 million by end of 2021. While the revenue growth in the near term will continue to be driven by the consumer digital services, JIO has laid a strong foundation for growth from the SMB segment. This we expect to be the key drivers of revenue growth from 2022.