Study Report on Reliance Jio and its Valuation

Facebook announced on April 21st the acquistion of 9.99% stake in Reliance Jio Platform for Rs43,574 crore (US$ 5.7 billion), bringing the equity value (market capitalization) of Reliance Jio Platform to US$ 57 billion. Following Facebook's investment,  US-based private equity firm Silver Lake acquired 1.15% stake in Reliance Jio Platform for Rs5,655.75 crore (US$ 746.8 million) on May 4; Vista Equity Partners acquired 2.32% stake in Reliance Jio Plaform for Rs11,367 crore (US$ 1.5 billion) on May 8; General Atlantic acquired 1.34% stake in Reliance Jio Platform for Rs 6,598.38 crore (US$ 870 million). These three investments moved the equity value of Reliance Jio Platform up to USD65 billion, with a price-earnings ratio (P/E) of nearly 90 times, and an increase in market capitalization of USD8 billion within an half month.

After the investment by Facebook, Mukesh Ambani, the chairman of Reliance Industry, the parent company of Reliance Jio Plaform, topped Alibaba's Jack Ma to become the richest man in Asia again, according to the Bloomberg Billionaires Index. And Reliance Jio Platfrom became the fourth largest company in India and the ninth largest telecommunications operators in the world. 

SubmarineNetwork.com has conducted an in-depth study and analysis of the above transactions, and tried to elaborate

• the history and rising of Reliance Jio;
• how Jio achieved the biggest telecom operator in India within three years, the losers under Jio's price war which including Reliance Communications, Vodafone Idea and Bharti Airtel;
• the Indian Supreme Court order on Adjusted Gross Revenue (AGR) dues on October 24, 2019, and its impacts to Indian telecom operators;
• the valuation of Reliance Jio Platform and Reliance Jio;
• comparisions between Jio and other 20 leading telecom operators in the world, from market capaitalization, net profit, margins, P/E ratio and subscribers,
• analysis on the reasons for Reliance Jio's valuation premium.

According to study by SubmarineNetwork.com, compared with Vodafone Idea and Bharti Airtel and other Indian telecom operators, Jio has achieved its leading and dominant position in Indian market, topped on mobile subscribers, revenue and profits, with growing and good ARPU compared to its competitors. Upon the above investments, Reliance Jio has almost achieved debt free operation, with good financial status to issue rights and enterprise bonds in the coming years.

It can be expected that Reliance Jio's profitability will grow by more than 50% or even double. Its valuation indicators such as P/E Ratio and EV/EBITDA are expected to fall back to a reasonable range. Or on the other words, Jio’s valuation may rise further.

Contents

1. Background

2. The histroy and rising of Reliance Jio

3. Disruptive 4G policy and price war launched by Reliance Jio 

4. Reliance Jio topped the No.1 telecom operator in India

5. Competitors disrupted by Reliance Jio

5.1. Reliance Communications' bankruptcy

5.2. Vodafone Idea, survival from  closing down

5.3. Bharti Airtel, successive lose in the past two years 

6.  The Indian Supreme Court October 24 order on Adjusted Gross Revenue (AGR) dues

7. Valuation of Reliance Jio and Reliance Jio Platfrom 

8. Comparisions among Jio and other 20 leading telecom operators in the world

8.1. Market capitalization

8.2. Net profit

8.3. Margins 

8.4. Subscribers

8.5. P/E Ratio 

9. Reasons for Reliance Jio's valuation premium 

9.1. Indian market

9.2. The influence of Reliance and the billionaire

9.3. Growing momentum of Reliance Jio

9.4. Facebook's ambitious in India

9.5. Unlimited QE amid COVID-19 pandemic