On Jio Platforms
Contents
On capex and free cashflow
On industry size
On ARPU growth and customer base
On moat and market share
On borrowings and objects of offer
On satellite connectivity risks
On ROE
Jio operates with revenue of Rs 150,000 cr and profits of rs 30000cr.EBITDA margins of around 56% and PAT margins of 20%
On capex and free cashflow
Jio spends 30k cr to 45k cr on capex every year. Company has declared that capex intensity to reduce going forward. They will likely not incur heavy infra capex for 6G rollout which is about to happen somewhere between 2029 and 2030. They will rollout the same via software upgrade.
CFO ( cashflow from operations) is 77000cr, capex is 34000, FCF ( free cashflow) is 33000cr. This will perhaps increase from here as capex intensity is slated to decrease.
On industry size
The mobile connectivity market in India is estimated to grow from ₹2,70,000 in Fiscal 2026 to ₹5,20,000 in Fiscal 2031. The fixed broadband market is expected to surge from ₹35000cr to ₹92000cr over the same period.
Total mobile consumer base is 102 cr, which is not near saturation compared to US where ratio is greater than 100%.
Data usage is higher than that in US.
On ARPU growth and customer base
Since the mobile consumer base is getting saturated,and broadband industry size is only 35000cr ARPU growth is likely to be the growth driver.So we must not expect too high growth from that.
On Moat and market share
Jio has a strong moat as huge capex has been undergone to set up the infra of Jio which can't be taken overnight. PPE on balance sheet is at 250,000cr. Plus the 39% market share and market leadership it has created across last 10 years.
On borrowings and objects of offer
27500cr of IPO proceeds will be used for debt repayment. Total debt stands at 70000cr so debt will come down to 42500. Equity is 3,37,000cr. Debt equity will become around comfortable 0.12.This is excluding lease liabilities. Balance sheet has a healthy Investments of 30000cr and cash of 16000cr.
On satellite connectivity risks
While currently commanding the FWA market, the Analysys Mason Report highlights satellite-based connectivity (e.g., Starlink) as a potential disruptor. If satellite technology scales faster and reduces costs more aggressively than anticipated, it could threaten the Company's fixed broadband expansion in rural and remote geographies.
On low ROE ( Return on equity)
All said, ROE is at low 8% vs Airtel at 20% ROE. ROE is the PAT that is earned on the Equity portion of the balance sheet.
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