Jio’s record IPO cannot resolve its balance-sheet questions

By Elena Vasquez

Jio Platforms Limited is preparing an IPO of up to INR302.13 billion (€2.84 billion), a record raise that would make it India’s largest-ever public offering. The company has more than 524 million subscribers and controls nearly half of India’s wireless market, according to Murthy Grandhi, a Company Profiles Analyst at data and analytics company GlobalData.

How large is the offering?

“The proposed IPO is set to be India’s largest-ever public offering,” Grandhi said in the October 23, 2026 analysis. Jio has built positions in 5G, fixed wireless broadband, enterprise connectivity, cloud and digital applications, giving it a distribution network beyond traditional mobile service.

Revenue reportedly reached roughly INR1,460 billion in FY26, while EBITDA stood near INR762.55 billion. Those figures establish commercial scale, but Grandhi said headline numbers mask financial and structural questions around spectrum commitments, taxes and valuation.

What will the IPO proceeds repay?

Almost all IPO proceeds are intended to prepay conventional bank borrowings at Reliance Jio Infocomm. Such prepayment should reduce interest costs and strengthen the balance sheet, yet Jio reported net debt of only about INR95.39 billion at the end of June.

That contrast raises the central use-of-funds question: why raise up to INR302.13 billion if conventional net debt stands at that level? Grandhi’s answer points partly to obligations and cash flows that sit outside, or behave differently from, the headline debt measure.

Where does the higher leverage come from?

Jio carries INR1,040 billion in deferred spectrum-payment obligations to the government over many years. These commitments do not appear in the company’s stated net-debt measure, and the IPO will not retire them. Once analysts include spectrum liabilities and leases, Jio’s leverage looks materially higher than its headline balance-sheet ratios imply.

How large is the tax cushion?

Jio reported FY26 pre-tax profit of INR403.53 billion but paid only INR1.18 billion in cash taxes, while booking more than INR100 billion in deferred tax expense. Accelerated depreciation from years of heavy network investment created a substantial tax shield.

Grandhi cautioned that the shield does not invalidate Jio’s reported earnings, but its cash-flow benefit is temporary. As the shield is exhausted, potentially around FY29, annual cash-tax payments could rise toward INR110 billion or more.

Can tariffs and new services fill the gap?

To preserve free cash flow while meeting spectrum obligations and higher cash taxes, Jio will need continued tariff increases, customer upgrades and growth in home broadband and enterprise services. An INR10 monthly average revenue per user (ARPU) increase across its subscriber base could add more than INR60 billion in annual revenue.

India remains an extremely price-sensitive telecom market, where tariff increases can weaken subscriber additions. Jio therefore has to balance pricing gains against weaker subscriber growth, alongside the cash demands created by spectrum and taxes.

Is Jio cheaper than Bharti Airtel?

Jio’s churn rate of 1.67 per cent compares with Bharti Airtel’s 2.43 per cent. Grandhi sees that advantage as evidence that Jio’s broad digital ecosystem helps retain users, giving the operator a commercial strength as investors assess its premium.

On headline price-to-earnings (P/E), Jio appears less expensive than Bharti Airtel. But its P/E benefits from unusually low current cash-tax outflow, while enterprise value to EBITDA, a more relevant measure for capital-intensive telecom operators, shows a premium despite Jio’s lower ARPU and lower return on capital employed.

What are investors actually buying?

Investors are buying a genuine market leader, not a simple bargain. Jio combines wide distribution, strong retention and a credible digital-services opportunity with deferred obligations, parent-company dependencies and a valuation that assumes sustained execution.

Grandhi said: “The IPO’s real test will not be its listing-day performance. It will be whether Jio can turn scale into higher-quality, less capital-intensive, and more diversified cash flow.” The coming IPO terms, debt repayment and Jio’s cash-tax position around FY29 will show whether that conversion can happen before spectrum obligations and higher taxes narrow its investment capacity.