Hello, I am Priyanka Salve, writing to you from Singapore.
Welcome to the latest edition of "Inside India"—your source for news and updates from the world's fastest-growing major economy.
Last week, Indian billionaire Mukesh Ambani was criticized by Elon Musk for planning to launch a satellite communications service and dominate India’s telecom market, but he now has more pressing concerns.
Jio Platforms is preparing to launch a record-breaking IPO soon, but the market has responded negatively to its valuation demands, with investors seemingly unconvinced by the company’s positioning as a technology enterprise.
Do you have any thoughts on today's briefing? Feel free to share them with the team.
Key News
Jio Platforms, the telecommunications and digital services arm of Indian billionaire Mukesh Ambani, was labeled a "monopolistic" company last week by Starlink founder Elon Musk. The company has since lowered its valuation ahead of its upcoming IPO.
Jio Platforms is India's largest telecommunications provider, with over 50 million subscribers, but experts interviewed by CNBC say the company has been trying to position itself as a technology company rather than just a traditional utility provider; however, experts are divided on whether this positioning is justified.
On Wednesday, Reliance Industries stated in a stock filing that Jio Platforms' IPO could raise up to ₹302 billion (approximately $3.2 billion), with a price range of ₹1,065 to ₹1,119 per share. This implies a company valuation of approximately $108 billion, below the over $130 billion valuation rumored a year ago.
Global brokerage Nomura stated in a report on Sunday that Jio's enterprise valuation has been reduced from the previous estimate of $133 billion to $118 billion, based on IPO pricing details disclosed by Bloomberg News last week.
Reliance Industries, the parent company of Jio Platforms, did not respond to CNBC's email seeking comment.
At a $108 billion equity valuation, Jio is valued below Bharti Airtel, India’s second-largest telecom company; LSEG data shows Bharti Airtel’s current market capitalization exceeds $117 billion.
The report states: "After the listing, Jio may need to demonstrate its growth capabilities to public shareholders." The report also adds that the era of easy subscriber growth is coming to an end, and price increases are likely to become the primary driver of profit growth.
According to Jio Platforms' IPO filings, the company's average revenue per user (ARPU) is ₹214 ($2.25) per month, compared to Airtel's ARPU of ₹257 for mobile services, ₹527 for home internet, and ₹158 for digital television.
If one looks only at the telecom industry’s key metric—average revenue per user—Jio’s discount relative to Airtel seems reasonable, but Jio aspires to be viewed as a technology company, not just a utility.
Technology company or telecommunications company?
Neil Shah, partner at Counterpoint Research, said that through this IPO, Jio Platforms plans to settle its historical telecom debt, which will free up internal cash flow for second-phase growth.
According to the IPO filing, Jio plans to use the proceeds to repay its ₹275 billion telecom debt.
Shah said the next phase of investment will fund the company’s “gigawatt-scale green AI infrastructure” and low-Earth-orbit satellite network, positioning it within the tech enterprise category.
He noted that global tech giants such as Meta and Google hold nearly 10% and 8% stakes in Jio, respectively, and will not exit their investments through this IPO—indicating their willingness to wait for the next phase of growth.
At the company’s annual general meeting in June, Ambani told shareholders that Jio would “prove to the world that India can build a technology company with global scale, global capabilities, and global value.”
He emphasized that, according to data from the World Intellectual Property Organization, Jio Platforms rose from 340th to 20th place in the ranking for "speed of innovation as reflected in patents" over the past year.
At that time, Ambani announced that Jio Platforms plans to enter India’s satellite communications sector, a field that has also attracted interest from Musk’s Starlink. Last week, Musk stated that his company had spent “five years complying with every government law and requirement” and blamed Ambani for Starlink’s delayed launch in India.
However, despite the world’s first trillionaire and India’s second-richest person vying for the opportunity to provide internet services to remote areas of India, some experts still do not believe Jio Platforms is sufficiently established as a technology company.
Anurag Singh, managing partner and founder of Ansid Capital in the U.S., told CNBC that Jio Platforms wants a tech company valuation but currently "lacks product expertise."
He added that Indian investors may buy into Jio’s tech narrative out of necessity, but global investors won’t. Singh said that, for now, Reliance remains a utilities company and requires substantial investment to transform into a technology enterprise.
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Next
- October 15: India's September unemployment data
- October 21: Jio Platforms IPO Opens