Reliance Jio is reportedly scaling up its 5G-based fixed wireless access (FWA) business, Jio AirFiber, by accelerating customer additions over the next 12 months. This is part of its strategy to boost 5G monetisation ahead of a potential initial public offering (IPO) by year-end, ET reported, citing unnamed analysts and industry experts.
Also Read: Telcos Have Reached a Saturation Point with Limited Monetisation Prospects?
Optimised AirFiber Onboarding Process
The report quoted Jio officials, who said, "The company has started scaling up distribution and optimised the AirFiber onboarding process, which would enable it to connect over 1 million homes every month." By the end of September, Jio had over 2.8 million AirFiber connections, and analysts estimate that it added another 1.9 million home broadband users during the December quarter.
Targeting 1 Million Monthly Connections
"Jio is now targeting to add 1 million AirFiber customers within 30 days, and the monetisation of its 5G network through higher data usage and the ramp-up in AirFiber subscribers should add to the excitement ahead of a potential Jio IPO in late-2025,” brokerage CLSA wrote in a research note, the report highlighted.
Also Read: Jio Reports Fastest FWA Growth Globally with Over 2.8 Million AirFiber Connections
AirFiber Helps 5G Monetisation
"Strong AirFiber user additions can help break the 5G monetisation logjam since the monthly average revenue per user (ARPU) from 5G-based FWA business is more than three times higher (at Rs 650-700) than mobile ARPU (Rs 195 in Q2FY25)," the report quoted a person familiar with Jio's AirFiber subscriber expansion plans.
Unnamed analysts cited in the report said, "Jio is now counting on expanding its base of higher-ARPU generating AirFiber users to hasten 5G monetisation, especially since the full beneficial impact of the July 2024 mobile tariff hikes will reflect only from Q4FY25 and Q1FY26 quarters as the telco has a higher share of subscribers on longer-validity plans."
5G Monetisation to Boost Jio ARPU
They added, "Faster 5G monetisation would also boost Jio’s ARPU — a key performance metric — in coming months, making the telco more attractive to investors ahead of a potential IPO," However, in October 2024, a Senior Jio executive reportedly said that ARPU is a misnomer and that they think there is no use in Counting ARPU. More details on this can be found in the linked story.
Also Read: Reliance Jio Says Not Concerned About ARPU, Terming It a Misnomer: Report
JPL's Valuation
As per the report, a January 7 research note by Sanford C Bernstein valued Jio Platforms Ltd (JPL), which houses Reliance's telecom and digital properties, at USD 98 billion (approximately Rs 841,500 crore). Telecom makes up the majority of JPL's operations.
Currently, Reliance Industries holds a 66.5 percent stake in JPL. Among the remaining 33.5 percent, approximately 17.7 percent is collectively owned by strategic investors Meta and Google, while global private equity investors hold 16 percent. JPL had raised more than Rs 1.52 lakh crore from these marquee global investors in 2020.
Global brokerage CLSA estimates Jio's Ebitda or operating income to rise by 40 percent over the next two years to Rs 87,600 crore by FY27, driven by a combination of ARPU growth and subscriber additions. As per its estimates, Jio’s subscriber base is expected to reach 533 million in FY27, by which time its ARPU is estimated to grow to Rs 230 from Rs 195 in Q2FY25, according to the report.
IPO Plans
A senior Jio official, as cited in the report, recently said that there is "no haste" on IPO plans for JPL since investors Google, Silver Lake, and Mubadala Investment Co are committed for the long-term. He, though, had added that Jio is ready for the IPO with its strong financials.
Home Broadband, an Opportunity
The official also noted that out of approximately 300 million homes in India, only 30 million are currently connected. This presents a significant opportunity, making home broadband connections and small and medium businesses (SMBs) the next major focus areas for Jio.
Also Read: Reliance Jio Slows Down 5G Expansion Amid Monetisation Issues: Report
Bernstein projects Jio to achieve a 17 percent compound annual revenue growth over the next three years, driven by over 14 percent ARPU growth in FY26. The firm also expects Jio’s market share gains to continue, estimating the telecom operator will command a 48 percent revenue share by FY26, the report concluded.
