JioAirFiber : Potential Opportunity Analysis

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by Tanushree Jaiswal Last Updated: Sep 28, 2023 - 05:42 pm 382 Views
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In an era marked by digital transformation, India's telecom giant, Reliance Jio, has made a significant stride towards revolutionizing the broadband industry with its JioAirFiber service. With impressive projections and strategic investments, Jio is poised to not only expand its market share but also reshape the way India connects to the internet.

JioAirFiber: Bridging the Digital Divide

Jefferies India's recent projection of a $7-10 billion revenue potential for JioAirFiber highlights the substantial market opportunity this venture offers. The core of JioAirFiber's vision is to promote broadband adoption, particularly among the 85 million Pay-TV households in India that currently lack internet access.

Currently, India boasts 35 million broadband households and 120 million pay-TV households among a total of 319 million households. Jio aims to tap into this market by providing fast and reliable fixed wireless access (FWA) broadband services.

The JioAirFiber Advantage

  1. Jefferies India's analysis sheds light on several key advantages that position JioAirFiber for success:
  2. Hefty Network Investments: Reliance Jio has invested significantly in building a robust network infrastructure, ensuring that JioAirFiber can deliver high-speed internet access to millions of homes.
  3. SA 5G Infrastructure: Jio's standalone (SA) 5G setup empowers the company to offer dedicated speeds to its FWA customers, ensuring a superior internet experience.
  4. Content and Entertainment: JioAirFiber packages include content from over 550 TV channels and 14+ OTT apps, making it a comprehensive home entertainment solution rather than just an internet connectivity provider.
  5. Strategic Investments: Reliance's acquisition of Mimosa Networks enhances FWA capacity through unlicensed band radio, further strengthening Jio's position in the broadband market.

Revenue Streams and Growth Prospects

Jefferies India's report highlights that Jio's access to 30 million affluent homes positions it as a key player in India's $4 billion TV ad-market. By understanding content viewership patterns, Jio can tap into this market for additional revenue.

Moreover, there are opportunities for revenue expansion through cloud PC and gaming services, home networking solutions, and security offerings. Jefferies anticipates a substantial increase in home broadband revenues, projecting a 4x jump to $2.3 billion in FY26.

Future Outlook

The future appears promising for JioAirFiber. Jefferies India predicts that Jio will scale its FWA offering to 35 million homes by March 2026. This, coupled with a 4x growth in home broadband revenues, indicates a strong growth trajectory.

Investors have taken note of these developments, with Jefferies India raising its target price for Reliance Industries Ltd by 27 percent to Rs 2,975 per share. The report also maintains a buy rating on RIL.

In a bullish scenario, Jefferies even envisions a price target of Rs 3,200 per share, signifying a 32 percent increase. This optimism is fueled by expectations of a recovery in GRMs/petchem margins, potential tariff increases for Jio amid telecom sector consolidation, the potential public listing of Jio, and faster-than-expected market share gains by Reliance Retail and Jiomart's GMV surpassing expectations.

In summary, JioAirFiber's ambitious foray into India's broadband market holds immense potential. With a solid network foundation, a comprehensive entertainment offering, and strategic investments, Jio is well-positioned to not only capture a significant share of the market but also reshape the way India connects to the digital world. As the digital landscape continues to evolve, Jio's innovations promise to play a pivotal role in shaping India's digital future.

Ratios  (FY23)
Stock P/E (x) 24.8
Dividend Yield (%) 0.38
ROCE % 9.14
ROE % 8.94
Debt to equity (x) 0.63
Return on assets % 4.78
PEG Ratio (x) 1.9
Int Coverage (x) 5.29

Chairman and Managing Director's Statement

The digital revolution is sweeping across India, and Reliance Jio is at the forefront of this transformation. Our commitment to innovation and expanding the reach of digital services has led us to introduce groundbreaking initiatives, with JioAirFiber being one of the crown jewels in our portfolio.

Strategy: Leading India's Digital Revolution with JioAirFiber

JioAirFiber represents a strategic leap towards the future of home broadband, connected TVs, cloud gaming, and smart home devices. As we usher in the next phase of India's digital revolution, our approach is centered on a few key pillars:

  1. 5G-Based JioAirFiber: Our True 5G services have rapidly expanded to over 2,300 cities and towns, demonstrating our commitment to high-speed connectivity. JioAirFiber offers clutter-free, high-speed connectivity of up to 1 Gbps to homes and offices. It's designed to support multiple devices simultaneously without compromising on quality.
  2. Physical-Digital Distribution Infrastructure: With a mobility network covering over 99% of the population and fiber reaching approximately 25 million homes, we have the widest and deepest market presence in India. Our extensive digital stores, merchant partnerships, and Jio Associates further enhance customer outreach.
  3. Acceleration in Wired Broadband: JioFiber has been a driving force behind the industry's expansion, resulting in a 20%+ year-on-year increase in wired broadband connections in India, reaching around 33 million by March 2023. This growth is fueled by the demand for high-quality internet at homes, especially in the post-pandemic era of flexible workspaces and online education.
  4. Increasing Fixedline Penetration: Our intracity fiber network, JioAirFiber rollout, last-mile execution, and attractive bundled digital solutions are expected to extend our reach to 100 million homes.

Expectations and Performance: The JioAirFiber Journey

The journey of JioAirFiber has been marked by significant milestones and impressive growth:

  1. By the end of the financial year, our 5G coverage extended to over 2,300 cities and towns, a testament to our rapid network expansion.
  2. JioAirFiber has redefined high-speed connectivity, enabling seamless usage across multiple devices while maintaining internet speeds and stability.
  3. We've enhanced security with features like safe browsing, network security, and parental controls.
  4. Through Jio Platforms, we powered the streaming of major events such as the FIFA World Cup, Women's Premier League, and the Indian Premier League, demonstrating our technological prowess.
  5. Our home broadband backup plan is expected to further expand the broadband market, providing a comprehensive solution to our subscribers.

Jio's Vision: Making Connectivity Accessible and Affordable

At Jio, our vision is clear: to provide the highest level of connectivity to the masses at affordable prices. We are committed to continual innovation and launching newer technologies and products that expand the market for digital services.

Our True 5G stack, JioAirFiber, JioDive, and other feature-loaded technologies are just some examples of our dedication to delivering superior digital experiences to our users.

Conclusion: Shaping India's Digital Future

As we look ahead, JioAirFiber remains a cornerstone of our mission to shape India's digital future. We are poised to redefine how homes connect, work, learn, and entertain themselves. With our relentless pursuit of innovation and commitment to expanding the digital ecosystem, Jio is positioned to continue leading India's digital revolution, one breakthrough at a time. Stay tuned for more exciting developments as we embark on this journey to transform lives and redefine connectivity in India.

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About the Author

Tanushree is a seasoned professional with 6 years of experience in the Fintech and Edtech industry.


Investment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.
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