The increase in the recent tariffs and the growth in the home broad band userbase boosted Reliance Jio Infocomm’s average revenue per user (ARPU) in the December quarter, and it is likely to continue given that the full impact of the rate increases and is said to play out over the next few quarters as per the talks on the street.

On the other hand, Vodafone Idea’s 3.3 percent sequential revenue growth during the quarter is insufficient to drive the required cash flows to meet the telecom operator’s mounting interest and financing costs, which increased 4.2 percent quarter-on-quarter to Rs. 5,300 crores. The cash-strapped Carrier’s declining quarterly capital expenditure could weaken its network strength and reduce its competitiveness further against Reliance Jio and Bharti Airtel.

Nitin Soni, senior director, Fitch says, “Jio reporting a higher quarterly Ebitda (earnings before interest, tax, depreciation and amortisation) growth than revenue shows it's totally focused on profitability growth and grabbing high-ARPU customers. By contrast, VI’s trend of falling capex levels, heavy customer losses and weak cash generation continues, and its modest sequential revenue growth is insufficient to meet its rising interest and financing costs.”

According to the analysts the 5.8 percent sequential rise in Jio’s quarterly operating income Rs. 9,510 crore was changed by lower-than-expected network operating costs (Rs. 6,240 crore). The increase boosts the Reliance jio’s profits in the October-December period.

Jefferies says, “Jio's prepaid tariff hikes effective December last year, amid subscriber clean-up suggests that its focus is shifting towards quality subscribers and ARPU-led growth, which bodes well for the overall pricing environment. Jio’s ARPU grew nearly six percent quarter-on-quarter to around Rs. 152 in the third quarter of the financial year.”

The global brokerage, says, “Jio’s incremental margins in 3Q, at 86 percent appeared very high and indicate certain cost reversals which may not be sustainable. It has cut the telco’s 2021-22-to 2023-24 revenue estimates by 1-4 percent and Ebitda estimates by up to two percent. Over FY22-24, we expect Jio to deliver 17 percent/21 percent CAGR in Ebitda/profits, but we cut its valuation by one percent to $87 billion on the back of estimated cuts.”