Reliance Jio and Bharti Airtel are two of the leading telecom operators in India with several hundred million users under their portfolio. CLSA, a global brokerage firm, said that Jio and Airtel are two of the most direct ways to invest in India's digitalisation (via BusinessToday). Both telecom operators have launched 5G and plan to roll it out through the entire country at a record pace. Jio's IPO (Initial Public Offering) is in the near future and it will be a rerating catalyst for Bharti Airtel's stock.
Jio, the largest telco in India, is an unlisted entity housed under Reliance Industries Limited (RIL). Many major firms such as Meta and Google invested in Jio a few years back. CLSA has given a buy rating for both Jio and Airtel. Since Jio is unlisted, investors can gain exposure to the company by investing in RIL.
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Both Airtel and Jio compete head-on. Even though Jio's subscriber base is significantly larger, Airtel has a higher average revenue per user (ARPU). In fact, Airtel is the only telecom company in the country right now that is earning more than Rs 200 out of each of its customers on average. Bharti Airtel's medium-term target for ARPU from its India mobile business is Rs 300.
5G should act as a major boost for the revenues of both companies in the medium-to-long term. Both telcos have launched 5G FWA (Fixed-Wireless Access) service in the country. Jio has reached 262 cities with Jio AirFiber (5G FWA) while Airtel is only offering it in two cities - Delhi and Mumbai.
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CLSA noted that Bharti's strength is in allocating capital, which it does so efficiently. The brokerage expects Airtel to witness a better return on capital employed (ROCE) and forecasts USD $10 billion annual operating cash flow by FY26.
