Bharti Airtel and Reliance Jio will almost double their capital returns by 2028 as network expenditure falls below depreciation levels, unshackling better cash flows after 15 years of intensive infrastructure outlays, ICICI Securities estimates.The report says that both entities are crossing into a “value creation zone,” with better return on capital employed (RoCE) and robust free cash flows. Airtel‘s RoCE is expected to pick up from 14.2% in FY25 to 28.4% by FY28, while Jio Platforms’ RoCE is likely to rise from 14.3% to 21.4% in the period.Jio, which is gearing up for an initial public offering in the first half of 2026, will touch an estimated valuation of $148 billion by September 2027, ICICI predicts, as reported by ET. The free cash flow of the company is projected to triple to Rs 558 billion by FY28.The turnaround comes as both companies are now spending less on network expansion than the depreciation value of their existing equipment. “We see FY26 as an inflection point for Bharti’s financial parameters, where D&A is going to be higher than capex. This means FCF generation will likely surpass net profit. The rise in FCF generation would result in faster deleveraging and potentially generous dividend payout,” the report said.Sustainable pricing and the transition to 5G services are also helping improve it. “Tariffs are structurally on an up move with lower opportunity to downgrade,” ICICI Securities said, adding that initial shifts in tariff structure decrease the risk of revenue growth.Jio attained 46.2% 5G penetration of its 507 million subscribers, with 65–70% of India’s 5G customers. Jio is shifting subscribers from lower-priced unlimited 5G plans of 1.5GB a day to higher-tariff unlimited 5G plans beginning at 2GB a day. The report states that a 5G upgrade leads to tariffs 17–30% more than 4G plans.The two operators are also diversifying outside of mobile businesses. Fixed broadband revenue will increase at a 15.4% compound annual rate to FY30 to Rs 522 billion for the sector. Enterprise digital services—such as cloud, cyber, and managed services for small and medium businesses—are becoming high-margin growth drivers. Airtel’s home and enterprise business is expected to rise at a 29% compound annual rate by FY28, versus 6.3% in its traditional mobile business.ICICI Securities, as cited by ET, termed FY12-20 as a period of “capital destruction” for Indian telcos, characterised by returns being lesser than the cost of capital owing to costly spectrum auctions, technology upgrades, and fierce competition. FY21-25 has been termed a period of “value protection”, with returns equaling costs but substantial investments still being made. The subsequent phase, FY26-28, has been termed the era of “value creation,” with these investments likely to yield profits.Airtel invested Rs 2,135 billion in capex and Rs 1,550 billion in spectrum between FY12-25. Its FY25 capital expenditure including spectrum was Rs 266 billion, less than depreciation of Rs 283 billion. Over FY26-28, Airtel’s estimated capex of Rs 531 billion will remain below depreciation of Rs 827 billion, generating higher free cash flow than profit and allowing faster debt repayment.Jio Platforms’ consolidated EBITDA is expected to grow at 18.1% annually through FY28, reaching Rs 1,057 billion, while profit after tax grows at 21.1% per year.
Airtel and Jio to enter ‘value creation’ zone: RoCE to rise; ICICI Securities predicts strong cash flow and profits – The Times of India
