CLSA says Jio and Airtel are Direct Investment Path for India's Digitalization

Dependence with hundreds of millions of customers between them, Jio and Bharti Airtel rank among India's top telecom providers. Jio and Airtel are two of the most straightforward methods to engage in India's digitization, as stated by Business Today, according to CLSA, a global brokerage business. 5G has been introduced by both telecom providers, and they intend to rapidly expand its availability across the nation. The impending IPO (Initial Public Offering) of Jio is expected to be a rerating driver for the stock of Bharti Airtel.

The biggest telecom company in India, Jio, is a non-public company that is a part of Reliance Industries Limited (RIL). Many large companies, like Google and Meta, made investments in Jio few years ago. Jio and Airtel both have a buy rating from CLSA. Due to Jio's lack of listing, investors can still learn about the company by making investments in RIL.

Jio and Airtel engage in direct competition. Jio has a much greater user base, yet Airtel has a higher average revenue per user (ARPU). Indeed, Airtel is currently the only telecom provider in the nation making an average of more than Rs 200 from each of its users. The medium-term ARPU objective set by Bharti Airtel for its India mobile business is Rs 300.

In the medium to long run, 5G should significantly increase both firms' revenues. In the nation, 5G Fixed-Wireless Access (FWA) service has been introduced by both telecoms. With Jio AirFiber (5G FWA), Jio has expanded to 262 cities, whereas Airtel is only available in Delhi and Mumbai.

The CLSA pointed out that Bharti excels at efficiently allocating capital. By FY26, the brokerage projects that Airtel will have improved return on capital employed (ROCE) and generate operating cash flow of USD 10 billion annually.