Jio says tariff hikes can wait, eyes 10-15 partners for overseas play

Fresh from its stock market debut, Jio Platforms is looking beyond mobile tariff hikes to drive revenue growth, with plans to expand its digital services business and take its technology overseas.

Jio does not want to rely solely on charging subscribers more and will decide on tariff increases at an apt time, depending on market conditions and the broader economic environment, the company's management told analysts on Friday.

"As a company, we don't want to use that (tariff hike) as the only lever of growth. What we want, we have capability of creating a technological layer, we want to stress that as a more sustainable way of doing it," managing director Akash Ambani said.

The statement assumes significance as it has been over 2.5 years since telecom operators took an across-the-board increase in headline tariffs. Analysts and investors have been speculating a tariff hike for over a year now, as it is seen necessary to boost return on capital employed for the operators. And now, after the listing of Jio Platforms, analysts are indicating a nearly 15% hike in the current fiscal year.

Tariff hikes are key to boost the average revenue per user (Arpu) of operators, a critical metric that measures the average revenue generated per subscriber. Higher tariffs help operators improve revenue growth, profitability and cash flows.

"We want to focus on how we are adding more value to customers and thereby increasing the realization that we have from the customers," Anshuman Thakur, chief strategy officer of Jio Platforms said during the call, adding that the company wants to focus much more on the digital services that it is offering to the customers.

"Even today, if you look at our growth trajectory, Arpu has grown by almost 3.5%. Around 4-5% growth in Arpu just because of customer mix changing, people consuming more is happening organically," Thakur said. "Our realizations from customer has grown faster, the bid which goes into JPL (Jio Platforms), which is where we are offering digital services and customers are paying for that separately is growing faster and that's a focus area for us."

In the September quarter, the company's Arpu rose 1.5% sequentially and 3.5% year-on-year to ₹218.8 a month in the September quarter, from ₹215.6 in the preceding quarter. Promotional 5G offers continue to constrain its Arpu growth. To be sure, its peer Bharti Airtel, which had an industry leading Arpu of ₹264 as of June end, recently removed the entry-level tariff of ₹299 and also hiked postpaid tariffs by 3-11%.

Jio has, however, not taken cue from Airtel on its postpaid tariff move.

"After the JPL IPO and impending Vi's fund raise, we believe the case for a tariff hike is stronger. However, we now build in a smartphone tariff hike of 15% ( ₹50 increase on RJio's ₹299/28-day plan) from March 2027 (vs December 2026 earlier)," analysts at brokerage Motilal Oswal said in a 28 October note.

Discontinuation of the unlimited 5G offering could provide a near-term tailwind for Jio's Arpu growth, they said.

The company said it will operate as a managed service partner and will take a selective, asset-light approach, rather than make large investments in overseas telecom infrastructure. The plan is to take its technology stack across 5G networks, home broadband including fixed wireless access (FWA) and the unlicenced band radio (UBR) technology, and its feature phone operating system, global. UBR is a wireless broadband technology that uses unlicensed spectrum to deliver home broadband internet connectivity.

Asked about the partnership discussions and potential revenue from the international business, Ambani said, "in terms of the market opportunity, see, it has to be sizable. From our perspective going international and being a meek play or having that buildup is not going to be the opportunity that we chase. We want to think, maybe 10-15 partners that give us a fair scale."

The company is looking at developing as well as the developed markets. "We are Arpu of $6 (in home broadband) and our operating cost of UBR is almost $3. So, we can really play from the high Arpu markets to the low Arpu markets," Ambani said, adding that the company is setting up its international team with zero customers and zero revenue. UBR is a wireless broadband technology that uses unlicensed spectrum to deliver home broadband internet connectivity.

The company's international operations are being led by Daniel Balley, alongside Mathew Oommen.

"JPL plans to sell this stack abroad as technology plus managed services, a ₹19.7 trillion ($200 billion) one-time opportunity size of capex spend. We assign it no value as we would like to see the materialization of overseas ambition alongwith disclosure of economics," said analysts at Dolat Capital in a note of 28 October.

On capital allocation and acquisitions, Ambani said, "if we find in a traditional Indian way a 1+1 equals 11 kind of acquisition, then we can evaluate those and then do that. Because what we see is that we are the only ones that can actually operate at a leverage that we have seen anywhere in the world."

On 28 October, Jio Platforms listed on the stock exchange, delivering listing gains of 21.4% to shareholders over the issue price of ₹1,119. After listing, Jio is now the country's second-most-valued listed company, with a market capitalization of ₹13 trillion, after its parent Reliance Industries.

To a query on dividends, Ambani said, "On dividends, Reliance has always led the way, and decided. We will be trying to follow the same things but obviously, we need to see our first year as a listed company, learn as a company, know what we want to do, and definitely want to focus on the market opportunity ahead."

In the first half of this fiscal, Jio has generated a strong free cash flow of ₹32,130 crore, up 98% from a year ago. The company said a substantial part of its network investment was already done. Its net debt as of September end was at ₹8,822 crore, down 79% from ₹41,161 crore a year ago.