Heraldo de Madrid - Jio’s next phase turns attention from subscriber growth to returns

Reliance Jio’s next stage will test whether its scale in telecom and digital services can translate into stronger monetisation, disciplined investment and durable shareholder returns.

The offering, structured as an offer for sale, does not raise fresh capital for Jio. Its significance lies in putting a market value on one of India’s most consequential digital businesses and giving public-market investors a direct stake in its future. More than a decade after Reliance disrupted telecom with rock-bottom tariffs and triggered a brutal shakeout, the industry has settled into a duopoly dominated by Jio and Bharti Airtel. Scale, network efficiencies and exploding data consumption have allowed Jio to build a profitable business.

Still, as subscriber growth matures and public-market investors demand sustained earnings growth, Jio will face pressure to monetise its enormous customer bases. The regulator must guard against excessive or abrupt price increases in a market where meaningful alternatives for consumers are limited. The objective should not be to suppress returns, but to ensure that the consumer welfare gains prominence over investor interest. For Jio, however, the bigger question is what comes after subscriber-led growth. Its most valuable asset may increasingly be the network infrastructure and distribution platform it has already built. The next phase will depend on how effectively it can use that infrastructure across fixed broadband, enterprise connectivity, 5G applications, satellite communications and telecom network equipment.

The convergence of these businesses could expand Jio’s market. Mobile connectivity, fixed broadband and satellite services could complement one another. There is, however, an important part of Reliance’s digital strategy that sits outside Jio Platforms: Reliance Intelligence. This distinction matters because artificial intelligence is likely to define the next phase of the technology cycle. Reliance is building AI capabilities and infrastructure through the separate entity, including investments in computing and data-centre capacity. For investors, this creates an intriguing distinction. The Jio listing puts a market price on a vast telecom and digital-services platform, but the entire AI opportunity being developed within the Reliance group is not necessarily contained within Jio Platforms. The strategic question will be how the two businesses interact: Jio brings the network, customers and distribution; Reliance Intelligence is being positioned around the computing and AI opportunity. Jio’s challenge is to turn scale, infrastructure and distribution into sustained growth — without sacrificing the affordability and competitive dynamism that made India’s digital revolution possible.

C.Valero--HdM