Jio's free cash flow declined by 82 percent in FY22.

By: Priya Singh

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Updated on: 11-May-2022

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Jio's net profit for the March quarter increased over 24% year on year to Rs 4,174 crore, but it fell short of analyst expectations because its 10.5 percent quarterly Ebitda growth was less than the 15% expected by several brokerages. Revenue from operations was up 8% sequentially to Rs 20,901 crore, although it fell short of expectations.

On Monday, shares of Reliance Industries, Jio's parent company, fell 3.97 percent to Rs 2,517.15 on the BSE.

To be sure, experts noted Jio's 8% sequential revenue gain in the shorter March quarter reflected the telco's ability to handle the 20% rate hike in December 2021 better than the one in December 2019. They also expect the current quarter to see the remaining benefits of the December 2021 tariff hike. This is because a larger percentage of Jio subscribers have longer-validity plans. Analysts also expect Jio to post customer growth in the current quarter, partly at the expense of loss-making Vodafone Idea, and since it has nearly completed its three-quarter exercise of weeding out millions of low-value consumers.

Jio's customer clean-up is nearly complete, according to IIFL, with its active subscriber ratio rising to 94 percent, close to Bharti Airtel's 98 percent.

In the March quarter, **Jio lost 10.9 million mobile subscribers ** as a result of the December pricing hike, however the majority of these were low-spenders on the network.

Analysts predict Jio's FCF/ROCE (free cash flow/return on capital employed) to improve starting in FY24, as the telco plans to invest heavily in 5G spectrum in the forthcoming June auction.