Analysts have cut Reliance Jio\u2019s enterprise valuation (EV) to $111 billion from $117 billion on concerns of lower revenue flow-through from the next tariff hike \u2014 likely in late-2025 \u2014 and higher costs.<\/p>\n
Jio has underperformed second-ranked Bharti Airtel in converting the July 2024 mobile tariff hikes into revenues, according to the analysts. The telecom market leader\u2019s mobile revenue growth since the headline rate hikes is estimated at a peak of 13%, trailing Airtel\u2019s 17%. <\/p>\n
\u201cWe cut Jio\u2019s Ebitda estimates for FY26\/27 by 3%\/6% due to sustained increase in sales & distribution (S&D) costs and lower flow-through from the next tariff hike, assumed in late-2025. Consequently, we cut Jio\u2019s EV from $117 billion to $111 billion,\u201d IIFL Securities said in a research note seen by ET. <\/p>\n
The brokerage added that Jio recorded an estimated 10.7% mobile revenue growth since the July tariff hikes. \u201cAfter factoring in any future flow-through, Jio\u2019s benefit may be 13% versus Bharti\u2019s 17%,\u201d it added. This extra flow-through has been factored in as Jio\u2019s management expects a small uptick in the next two quarters from subscribers on longer-duration annual plans. <\/p>\n
On Friday, Jio reported a 24.5% on-year growth in net profit for the March quarter at Rs 6,642 crore. Revenue from operations rose 15.6% to Rs 30,018 crore. Average revenue per user (ARPU) grew 1.4% sequentially to Rs 206, which implies the full residual pass-through of the last tariff hike has not happened even after three quarters. <\/p>\n
ICICI Securities said Jio faced \u201chigher inflation across cost items\u201d, restricting Ebitda margin expansion. In Q4FY25, the telco\u2019s Ebitda margin stood at 52.8%, unchanged sequentially.<\/p>\n
Jio\u2019s network costs rose 6.9% on-year to Rs 8,400 crore, while selling, general & administrative (SG&A) expenses increased nearly 42% on-year to Rs 1,980 crore. Employee costs and access charges rose 4.3% and 132% on-year to Rs 504 crore and Rs 494 crore respectively. Interest costs too surged 34% on-year to Rs 1,346 crore as interest on 5G spectrum started reflecting in the company\u2019s P&L, it added. <\/p>\n
\u201c\u2026and the cost may continue to rise, driven by the commercial launch of 5G services and increased rollout of its JioFiber (home broadband) service that would help charge more fibre rental cost to the P&L,\u201d ICICI Securities said. <\/p>\n
IIFL Securities added that Jio\u2019s S&D costs jumped 7.3% sequentially to Rs 1,013 crore in Q4FY25 as the telecom industry continues to incentivise MNP (mobile number portability) through elevated channel payouts. \u201cA more aggressive Vodafone Idea (Vi) and no tariff hike from state-run BSNL are also likely playing a role in the battle for subscriber acquisitions.\u201d <\/p>\n
To be sure, analysts expect monetisation of 5G services as a potential \u201csweet spot\u201d for Jio since the telco has a dominant share of 5G subscribers in India.<\/p>\n
\u201cJio\u2019s 5G subs base has surpassed 191 million, and the company also sees its FTTH (fibre-to-the-home) user base potentially growing to 100 million, driven by strong demand for its 5G-based fixed wireless access (FWA) services and content bundling,\u201d ICICI Securities said. <\/p>\n
Jio has 85% market share in the FWA services segment with 5.6 million customers as of FY25-end. It added 1.2 million FWA subscribers in the March quarter with half of the fresh additions coming from Tier 3 and 4 towns.<\/p>\n
JM Financial said as per Jio\u2019s management most of the 5G equipment has been capitalised during end of 4QFY25, which should be reflected from 1QFY26 onwards. Jio has not shared any capex guidance but reiterated that bulk of its capex is behind, and that most vendor payments are already done.<\/p>\n
According to IIFL Securities, Jio\u2019s net debt and lease liabilities as of end-FY25 collectively stood at Rs 1,66,600 crore. \u201cOther liabilities declined by Rs 13,500 crore, which was largely driven by unwinding of capex creditors.\u201d <\/p>\n
Mukesh Ambani-led Jio\u2019s cash-capex stood at Rs 41,600 crore in FY25. According to analysts, it has made a deferred spectrum payment of Rs 4,600 crore. \u201cCash capex includes capitalised cost, and payment to capex creditors. Our assessment suggests underlying capex (excluding payment of capex creditors) stood at Rs 27,500 crore. Productive capex (excluding fibre rental capitalised) should be under Rs 20,000 crore,\u201d ICICI Securities said.<\/p>\n","protected":false},"excerpt":{"rendered":"
Analysts have cut Reliance Jio\u2019s enterprise valuation (EV) to $111 billion from $117 billion on concerns of lower revenue flow-through from the next tariff hike \u2014 likely in late-2025 \u2014 and higher costs. Jio has underperformed second-ranked Bharti Airtel in converting the July 2024 mobile tariff hikes into revenues, according to the analysts. The telecom market leader\u2019s mobile revenue growth since the headline rate hikes is estimated at a peak of 13%, trailing Airtel\u2019s 17%. \u201cWe cut Jio\u2019s Ebitda estimates for FY26\/27 by 3%\/6% due to sustained increase in sales & distribution (S&D) costs and lower flow-through from the next […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8],"tags":[],"class_list":["post-926060","post","type-post","status-publish","format-standard","hentry","category-telecom"],"acf":[],"_links":{"self":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/posts\/926060","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/comments?post=926060"}],"version-history":[{"count":0,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/posts\/926060\/revisions"}],"wp:attachment":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/media?parent=926060"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/categories?post=926060"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/tags?post=926060"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}