Reliance Jio may be its own worst IPO enemy

Bharti Airtel

16/02/2026 02:34

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Shritama Bose

MUMBAI, Feb 16 (Reuters Breakingviews) - Mukesh Ambani's endless quest for scale in India may be the top challenge his advisors led by Kotak Mahindra Bank and Morgan Stanley face in trying to secure the tycoon's telecom operator a sought-after $170 billion valuation in its upcoming blockbuster initial public offering.

Demand for Jio Platforms stock will almost certainly be strong, not least because the company will end up as a constituent of the country's benchmark Nifty 50 Index .NSEI. Whether it deserves to be valued more richly than its top rival is less clear, however.

     Size wise, Jio clearly trumps its top rival. Its 515 million total subscribers are more numerous than Bharti Airtel's BRTI.NS 466 million customers in India and its 25 million base of users for home broadband, which it's still rolling out, is nearly twice as large. Beyond that, things look less clear cut.

Ambani's firm is growing earnings before interest, tax, depreciation and amortisation at 17% year-on-year, impressive but slower than the 27% EBITDA increase at Airtel's India business. Profits at the duo are robust only because the tycoon's price wars tipped the sector into a quasi-duopoly over the past decade.

Jio's average revenue per user of 214 rupees ($2.36) a month also lags Airtel's 259 rupees. That's partly explained by the fact that Airtel calculates the metric only for subscribers who have made a payment in the last 30 days, while Jio includes its entire subscriber base. It underscores the company's focus on volumes.

That makes the two halves of the duopoly look more evenly matched. Yet a $170 billion valuation would equate to 42 times Jio's earnings for the year ending March 2027 according to estimates compiled by Visible Alpha. Airtel trades at around 30 times.

     What's more, Ambani's next target is to dominate artificial intelligence services and reduce inferencing costs in India to the lowest in the world to make "AI available everywhere for everyone". That raises the prospects of more price wars.

To be sure, Reliance Industries RELI.NS executives are talking up a proprietary in-house technology stack. This, they say, cuts the company's reliance on foreign equipment, is drawing interest from global operators and will give Jio an edge in scaling up growth drivers; users pay more for broadband than mobile, and its enterprise solutions from cloud services to internet of things are at an early stage of adoption.

If Jio can realise these advantages, it may be able to pursue scale and deliver superior shareholder value. For now, though, with the company generating 89% of its operating revenue from plain old telecom services, bankers will be asking prospective investors to take a leap of faith.

Follow Shritama Bose on LinkedIn and X.

CONTEXT NEWS

Jio Platforms, the telecom unit of Reliance Industries, is preparing for a Mumbai initial public offering.

Jio's reported average revenue per unit lags Airtel https://www.reuters.com/graphics/BRV-BRV/zgvoyqzmgvd/chart.png

(Editing by Una Galani; Production by Aditya Srivastav)

((For previous columns by the author, Reuters customers can click on BOSE/shritama.bose@thomsonreuters.com))