Airtel and Jio Enter Value Creation Zone as Returns and Cash Flows Surge

Bharti Airtel and Reliance Jio are set to experience a significant rise in returns on capital and cash flows over the next few years. Analysts predict both telecom giants will enter a “value creation zone” as network spending falls below depreciation levels, allowing for improved profitability and faster debt reduction. This comes amid expanding 5G adoption and diversification of digital services, signaling a strong financial outlook for Indian telecom.

Shift in Capital Returns
ICICI Securities projects that Airtel’s return on capital employed (RoCE) will jump from 14.2% in FY25 to 28.4% by FY28. Jio Platforms is expected to see RoCE increase from 14.3% to 21.4% in the same period. This improvement comes after years of heavy investment in network infrastructure, with capital expenditure now dipping below depreciation costs, freeing up cash for other growth areas.

Impact of 5G and Service Diversification
The rollout of 5G networks and expansion into new digital services are central to the value creation. Both companies are leveraging advanced telecom technology to enhance customer offerings, attract new users, and strengthen revenue streams. The reduction in network expansion costs directly contributes to higher free cash flows, which in turn can fund further innovation and debt repayment.

Jio’s IPO and Valuation Prospects
Jio’s upcoming initial public offering in early 2026 is expected to be a milestone, with analysts estimating a valuation of $148 billion by September 2027. Free cash flow is projected to triple to Rs 558 billion by FY28, supporting growth strategies while maintaining financial health.

Conclusion
For Tier 2 cities and beyond, the financial turnaround of Airtel and Jio promises stronger network reliability, expanded 5G coverage, and improved digital services. The shift into a value creation zone reflects a maturing telecom market in India, where sustained investments now translate into tangible returns and long-term benefits for consumers and investors alike.