Airtel, Jio to unlock new value with 5G, digital services

India’s top two operators—Bharti Airtel and Reliance Jio—are entering a phase where they are expected to generate strong profits and returns for shareholders over the next three years. The push for 5G is driving more premium customers, home broadband is expanding and new digital services for businesses – such as cloud, AI and cybersecurity – are opening up new revenue streams for the operators, according to a note by brokerage ICICI Securities. Based on the business potential, the brokerage has pegged Jio’s valuation at $148 billion by 2027. In comparison, at the current share price of ₹2,029, Bharti Airtel’s current market capitalization is at $132 billion, according to BSE. ICICI Securities has set a target price for Bharti Airtel’s stock at ₹2,400. An updated outlook for the sector came at a time when telecom operators complained of poor return on capital employed (RoCE) amid weak 5G monetization and low telecom tariffs. Jio is also looking at listing on the stock exchanges in the first half of 2026, thereby improving sentiment. Analysts expect Jio’s IPO to be the largest private sector IPOs India has seen. “We are upgrading our valuations for Indian telcos under coverage. Our renewed optimism stems from the healthier business and financial structures in this space. On the business front, there is greater visibility of an expanded premiumization trend aided by the 5G push, with little scope for downgrades,” analysts at ICICI Securities said in a note dated October 24. This phase of value creation in the telecom sector would come after a gap of 15 years. Telcos’ total addressable market (TAM) is also expanding through products such as fixed broadband, value-added services along with enterprise offerings including data centers, software-as-a-service (SaaS) and managed services, the analysts added. In terms of return on capital employed (RoCE) outlook, telecom operators are expected to see an upside in the same in the next two years due to reduced capital expenditure as the next round of spectrum renewal would start only from FY30 onwards. According to estimates from ICICI Securities, Bharti’s return on capital employed is expected to rise to 28.4% in FY28 from 14.2% in FY25, while Reliance Jio’s RoCE is expected to rise to 21.4% in FY28 from 14.3% in FY25. This must be supported by a drop in spectrum net block, as a percentage of gross block. Recapitalization can start only from FY30 onwards, the brokerage house said in the note. In particular, until FY20 there was an era of capital destruction—equity dilution, increased leverage and negligible shareholder returns. Analysts say the benefit for Indian telcos is the increasing collaboration with global technology giants to distribute their products in India. For example, Bharti Airtel recently partnered with Perplexity to provide access to the generative AI platform to its users. The company has also partnered with Google for an AI data center. Similarly, Jio also has tie-ups with global firms. Telecom operators have recently started focusing on monetizing 5G services. “We believe the 5G plans may continue to move up the tariff chain, where we have already seen unlimited 5G – which used to start from the 1.5GB per day plan until July 2024, which is now at 2GB per day (add ₹50 per subs to ARPU). It may continue to move to be a 2.5GB plan and thus CI secular per day,” makes Ico secular tendencies. Securities said in the note. Analysts expect a 5G upgrade to increase rates by 17-30% over 4G. This is a significant benefit for telcos over the next 3–4 years as 5G penetration increases. Jio Platforms reported a 12.8% year-on-year growth in net profit to ₹7,375 crore for the September quarter. Income from operations rose 14.6% to ₹36,332 crore. Bharti Airtel is expected to announce its September quarter earnings on November 3. Jio’s monthly average revenue per user (Arpu) rose 1.2% sequentially to ₹211.4 at the end of September from ₹208.8 at the end of June. In an earnings release, the company said that Arpu increased with increased customer engagement, but this was provisionally impacted by the promotional 5G offers. Bharti Airtel leads the industry with an Arpu of ₹250 at the end of June.