However, partial pass through of the July rate hikes of 12-25% along with strong home broadband user additions amid rising appetite for its 5G-based fixed wireless access (FWA) services helped Jio‘s average revenue per user (ARPU) grow after almost stagnating for five quarters, analysts added.
“We expected Jio to fare better given that it did not change tariffs for its feature phone users. Its sharp subscriber decline has surprised negatively…it lost nearly 11 million subscribers in 2Q due to higher churn upon SIM consolidation, post tariff hikes,” Jefferies said in a research note.
Jio’s churn rate in Q2FY25 was higher at 2.8% versus 1.7% in Q1FY25.
Nomura said Jio’s ₹15,000 crore reported Ebitda was 2% below estimates and reflected its sharply lower-than-anticipated subscriber base in Q2FY25.
Goldman Sachs, though, said Jio continued to see strong traction in its home broadband business, with higher net adds of 1.8 million in the quarter – compared with 1.2 million in June 2024 – which the company attributed to strong uptake of the telco’s FWA service – AirFiber.That demand is believed to have boosted revenue in Q2FY25 as ARPU from the 5G-based FWA business, typically, is at least three-times higher (around ₹600) than mobile ARPUs.Going forward, analysts expect Jio’s AirFiber service to be a key catalyst for home broadband adoption, especially since the cost of CPE (customer premise equipment) has fallen over the last 2-3 years. HSBC Securities sees Jio on track to corner 45% of the home broadband subscriber market by FY30 from 28% in FY24.
“As Jio’s distribution scales up along with optimised onboarding, the company could connect 1 million homes on a monthly basis…we have raised our estimates for this segment and forecast about 2.2-2.3 million quarterly net adds for Jio fixed subs in 3Q/4QFY25,” Goldman Sachs said.
Jefferies said Jio is well-placed to deliver 20%/25% growth in revenue/Ebitda compounded annually through FY25-27, given rising tariffs in mobile and scale-up of the home broadband business. The global brokerage has pegged Jio’s current enterprise value at $136 billion.
Jio, the country’s top telecom operator, reported a 23.2% on-year growth in net profit for the fiscal second quarter to ₹6,231 crore on a 14.4% growth in revenue from operations at ₹28,338 crore.
“Jio’s network costs rose 8.4% on-year to ₹8,200 crore in Q2FY25 and may continue to rise driven by the commercial launch of 5G services (including JioAirFiber),” ICICI Securities said.
It added that the telco’s SG&A expenses jumped 41.3% on-year to ₹1,600 crore on a higher churn rate. Employee costs too rose 6% on-year to ₹500 crore, while access charges increased by 22.1% to ₹400 crore with the growth of the enterprise business.
However, ICICI Securities, said Jio’s free cash flow generation (after finance cost) turned positive, at ₹650 crore in H1FY25. “This was aided by a significant reduction in calculated capex at ₹15,600 crore (vs ₹34,500 crore in H1FY24) while net debt reduced by ₹2,000 crore in H1FY25 to ₹1,59,700 crore.
