Reliance Jio’s aggressive 5G rollout reached warp speed in the final quarter of 2022 and somehow the company managed to continue a string of 13 consecutive quarterly profit gains dating back to before Covid-19 (coronavirus) entered the lexicon.
Net profit for Jio Platforms, the operator’s holding company, increased 28.6 per cent year-on-year to INR48.8 billion ($595.1 million) in its fiscal Q3 2023 (calendar Q4 2022) even as its 5G buildout reached parts of 134 cities since it commenced in mid-October 2022, requiring a significant hike in investment.
By end-January, 5G service covered 232 cities, with announcements covering 98 new locations in the previous seven days. The operator has not disclosed the number of base stations deployed or population coverage achieved to date.
Parent Reliance Industries’ capex was 36 per cent higher at INR376 billion in its fiscal Q3, with profit flat at INR178 billion.
While it is impossible to determine the exact amount invested in the operator’s 5G network, the impact on equipment suppliers Nokia and Ericsson offers an idea of the scale.
Nokia’s India sales grew 116 per cent during the period and accounted for almost half (44 per cent) of its total in the country for the full year.
Ericsson’s revenue in Southeast Asia, Oceania and India grew 21 per cent in the quarter, primarily due to India, with the sales accounting for around 33 per cent of the entire year.
Daryl Schoolar, VP of worldwide telecommunications insights at IDC, told Mobile World Live guidance from both vendors indicates they are positive when it comes to India despite neither commenting directly about the nation.
Nokia predicted single-digit growth in its mobile division for 2023, even as sales in North America, its second-largest market, are expected to be flat at best.
Ericsson recently increased the capacity of its operation in India to meet rising demand for 5G equipment from the country’s two major mobile players.
Schoolar said Jio had undertaken one of the most ambitious 5G network rollouts he has ever seen. He reckons the nationwide goal will be a challenge, but is achievable since the target is population coverage, not geographic.
He explained it appears the operator started with India’s largest metro markets, so in theory covering smaller cities should go faster. In addition, when Jio’s LTE network was being built by Samsung, it had an idea of what 5G would be.
“The 5G deployment in the market should be easier than what other operators faced with older LTE networks.”
Jio added 12 million subscribers across 2022 for a total of 432 million and recorded a 17.5 per cent increase in ARPU to INR178.20.
The operator certainly ended the year on a high, but how long can its double-digit profit growth hold up as it takes 5G coverage to more than 1,000 cities across India, home to some 1.4 billion people?