Jio IPO bids reach $24.5bn with INR1.04tn spectrum obligations

Jio Platforms received $24.5 billion in investor bids at the October 23 close of India’s stock market, ten times the proposed INR302.13 billion ($3.2 billion) IPO. The demand is substantial, but it does not resolve the operator’s exposure to deferred spectrum payments and potentially much higher cash taxes.

India’s Jio serves more than 524 million subscribers and controls nearly half of the country’s wireless market. Its portfolio spans 5G, fixed wireless broadband, enterprise connectivity, cloud services and digital applications, so the IPO would give investors exposure to network access and adjacent services.

Reported FY26 revenue reached INR1.46 trillion ($15.3 billion), while earnings before interest, tax, depreciation and amortisation (EBITDA) stood at INR762.55 billion. These numbers establish scale, but not the durability of cash generation.

GlobalData’s company profiles analyst Murthy Grandhi said: “the company’s headline financial figures did not fully reflect its long-term obligations and potential cash-flow pressures.”

What does the proposed IPO actually finance?

• Jio carries around INR1.04 trillion in deferred spectrum payment obligations. GlobalData says those obligations sit outside reported net debt and will not be repaid with IPO proceeds.
• Reported net debt was approximately INR95.39 billion at the end of June, against the proposed INR302.13 billion offering.
• The plan earmarks almost all proceeds for bank borrowings at Reliance Jio Infocomm, Jio’s telco and digital-services unit, with lower interest costs as the intended benefit.

The gap between reported net debt and the size of the raise raises the question GlobalData identifies: what role do wider spectrum liabilities and other commitments play in Jio’s financial structure? Almost all proceeds target bank debt, but the deferred spectrum balance remains outside their reach.

How large is the tax risk?

Jio reported FY26 pretax profit of INR403.53 billion, yet paid INR1.18 billion in cash taxes and recorded more than INR100 billion of deferred tax expense. Accelerated depreciation on network infrastructure created the tax benefit behind that gap.

GlobalData says the shield could be largely exhausted around FY29, potentially pushing annual cash-tax payments toward INR110 billion or more. That would create a recurring cash outflow while Jio continues to meet spectrum obligations and fund network growth.

To sustain cash generation, Grandhi said Jio would need further tariff increases, customer upgrades and expansion in home broadband and enterprise services. GlobalData cautions, however, that India’s price-sensitive market means higher tariffs could slow subscriber growth.

Can customer growth absorb higher charges?

An INR10 monthly increase in average revenue per user (ARPU) across Jio’s base could produce more than INR60 billion in additional annual revenue. The forecast does not show how many customers would accept the increase, leaving both churn and subscriber-growth effects open.

Jio’s customer churn rate of 1.67% is lower than Bharti Airtel’s 2.43%. GlobalData says the gap suggests Jio’s wider digital-services ecosystem may be helping retain users. The figures show an association, not proof that the ecosystem caused the difference.

What does the bidding total say about valuation?\n

On price-to-earnings, Jio appears cheaper than Airtel, but GlobalData says unusually low current cash-tax payments distort the comparison. On enterprise value to EBITDA, a measure commonly used for capital-intensive telecoms operators, Jio appears to command a premium to Airtel despite lower ARPU and returns on capital employed.

The financial picture is two-sided: strong demand, scale and reported profitability on one side; deferred spectrum, future taxes and relatively low ARPU and returns on capital employed on the other.

Grandhi said Jio’s scale, customer retention and digital-services business offered investors “a compelling growth opportunity,” but the IPO’s longer-term performance would depend on its ability to “convert that scale into stronger, more diversified cash flow while managing its financial obligations.”

Investors will therefore watch whether tariff changes, subscriber upgrades and expansion in home broadband and enterprise services can offset higher cash taxes as Jio’s depreciation shield could be exhausted around FY29, without eroding the retention advantage reflected in its 1.67% churn rate.