For now, Jio is the player setting the prices and determining the market sentiment for everyone else - a powerful position to be in for the newest entrant in the telecom industry.
Market disruptor Reliance Jio announced an update to its tariffs, increasing prices by 15-20%. That's a big deal for Airtel, Idea and other competitors, who have been bleeding heavily in the last six months as they worked to match what they said was Reliance Jio's below cost rates. Reliance Jio's Rs. 399, three month plan has now been repriced to Rs. 459, and these changes have already kicked in for customers.
The company share price has hit a new year high today, with investors hopeful of better returns on Jio's growth. For the time being however, Reliance may not see much of a bump in revenues, since this new tariff applies to fresh customers, allowing customers who bought plans before October 19 to retain the older rate. The company's Diwali offer also provided users with eight discount vouchers each, which customers can redeem anytime in the coming months.
Effectively then, the incremental revenues Jio sees until December are likely to be small. The new tariffs also raise effective ARPU per customer to Rs. 141, half of what Reliance said they would like to see. The company is clearly trying to balance customer acquisition with investor expectations, and it still has a way to go before it reaches the kind of profitability the Reliance investor would expect.
Earlier this month, Reliance Industries booked one million barrels each of WTI and Eagle Ford crude - oil from the United States, as the first US oil imports dock at Indian ports. India is fast diversifying its oil imports away from OPEC sources, as OPEC extends its oil production cuts and refuses to remove the premium on the oil it supplies to Asia.
India-US oil imports are resuming after over 40 years, and the docking of the VLCC carrier in Odisha is thus a new landmark in US relations. This helps India signficantly diversify its oil imports away from the 'fragile five' petrostates of Iran, Iraq, Nigeria, Venezuela and Libya, all of which are battling internal upheaval and violent uprisings.
India and the US have pledged towards stronger ties economically and politically, with US Secretary of State Rex Tillerson saying that India would be a key ally for the country's administration. Modi and Trump agreed to an economic deal that includes purchases of US shale oil (whose price now is cheaper for India than OPEC crude). Both Indian Oil Corporation and Bharat Petroleum have also placed orders for over 2 million barrels from the United States.
For the second quarter of FY18, Reliance Industries (RIL) earned $12 for every barrel of crude it turned into fuel, compared with a prediction by CLSA India of $12.80 a barrel.
This shift resulted in Reliance missing its estimates for the first time in over eight quarters. A big reason has been a factor over which Reliance has little control: since April this year, Saudi Arabia has begun offering its oil buyers lighter crudes, and cutting the availability of heavy grades, from which Reliance receives its highest refining margins. The Middle Eastern kingdom may continue wih this, since it is looking for higher revenue from the lighter crude versions.
Additionally, heavier grades of crude oil are in demand from Saudi Arabia's own refineries. The heavier grades of oil come from the country's offshore oilfields such as Zuluf, and the production and transportation of these grades are more expensive for the kingdom. The margins from its lighter crude are higher. The shift by Saudi Arabia may be long-term, which is likely to impact Reliance's refining margins into the next quarters. Reliance's share price has hit a new year high in the leadup to the Diwali festival celebrations.
|Ex-Date Dividend||Amount||Dividend Type||Record Date|
|July 13, 2017||11.00||-||-|
|March 17, 2016||10.50||INTERIM||-|
|May 8, 2015||10.00||-||-|
|May 16, 2014||9.50||-||-|
|May 10, 2013||9.00||-||-|
|Ex-Date Dividend||Bonus Ratio||Record Date|
|Sept. 7, 2017||1:1||Sept. 9, 2017|
|Nov. 26, 2009||1:1||Nov. 27, 2009|