Reliance Jio and Bharti Airtel are no longer competing on the same metrics, according to Macquarie, which said India’s two largest private telecom operators now offer distinctly different investment propositions. The brokerage expects Jio to enter a period of rapid cash flow generation after completing most of its network investments, while Airtel continues to lead on returns, capital efficiency and monetisation.
Jio Vs Airtel: Macquarie decodes the investment roadmap
It forecasts both companies to deliver around 12% EBITDA CAGR over the next three years, with each generating FY29 EBITDA of $12-13 billion, as India’s telecom sector benefits from tariff hikes, rising data consumption and expanding digital infrastructure.
Macquarie said, “Reliance’s Jio and Bharti Airtel represent two differentiated investment profiles within an improving Indian telecom sector. We view Jio as a scale-led growth and optionality play, while Airtel remains the benchmark on returns, capital efficiency, and cash generation.”
Jio’s investment cycle is ending, cash generation is beginning
Macquarie believes Jio has reached an inflection point after completing the bulk of its 4G, 5G and fibre rollout, allowing the company to transition from an investment-led business to one focused on generating free cash flow.
The brokerage expects Jio to deliver 11-12% revenue CAGR between FY26 and FY29, supported by subscriber additions, about 7% ARPU CAGR and expansion in fixed wireless access (FWA). It estimates free cash flow will increase to around $5-6 billion annually by FY29, compared with $4.1 billion in FY26, as capital expenditure declines and operating leverage improves.
Macquarie said, “Jio is now moving through an inflection in its operating model. Having completed the bulk of its 4G/5G rollout and fibre build-out, capital intensity is declining, enabling a transition from investment-led growth to cash flow generation.”
Airtel continues to lead on returns and capital efficiency
While Jio is expected to narrow the gap, Macquarie said Airtel continues to set the industry benchmark on return ratios and disciplined capital allocation.
The brokerage forecasts Airtel’s return on invested capital (ROIC) to improve to 21% in FY29 from 13% in FY26, while Jio’s ROIC is expected to increase to 11% from 7%. Airtel’s net debt-to-EBITDA ratio is projected to decline to 0.2 times by FY29 from 1.4 times in FY26, compared with Jio’s improvement to 1.2 times from 2.4 times.
Macquarie said, “Returns are set to improve as the investment cycle matures. Airtel retains a structural advantage with ROIC already ~13% and on our forecasts expanding to ~20% by FY29, reflecting a more efficient capital base and tighter capital discipline.”
Jio Vs Airtel: Subscriber growth slowing, tariff growth key earnings driver
Macquarie expects the next phase of earnings growth to come less from subscriber additions and more from higher tariffs and better monetisation.
The brokerage forecasts Jio’s subscriber base to increase to 553 million by FY29 from 524 million in FY26, while Airtel’s subscriber base is expected to rise to 388 million from 373 million. It expects Jio’s monthly ARPU to improve to Rs 259 from Rs 212, while Airtel’s ARPU is projected to increase to Rs 318 from Rs 256 over the same period.
Macquarie also expects two industry-wide tariff increases of 8-10% each following Jio’s proposed listing, likely in FY27 and FY29, adding that India’s mobile tariffs remain among the lowest globally and that even under these assumptions average ARPU would merely return to levels seen in 2009.
Jio’s biggest opportunity may lie outside telecom
Macquarie said Jio’s investment case extends well beyond its core mobile business and includes several businesses that are not reflected in its base-case estimates.
The brokerage highlighted opportunities in international deployment of Jio’s network technology, fixed broadband, FWA and the JioBharat ecosystem. It said Jio’s prospectus identifies a $145 billion broadband infrastructure opportunity across 95 countries with broadband penetration below 50%, where the company could offer managed network services using its in-house technology stack.
Macquarie said, “Beyond core mobility, Jio offers broader and less monetised optionality. This includes international deployment of its network stack, fixed broadband expansion, and device-led ecosystem growth. These adjacencies are not reflected in our Jio base-case estimates.”
The brokerage also expects both Jio and Airtel to benefit from rapid growth in India’s data centre industry through their connectivity infrastructure and partnerships with hyperscale cloud providers.
Macquarie sees further room for telecom sector earnings growth
Macquarie said Jio’s prospectus has strengthened its positive outlook on India’s telecom sector, with both operators expected to deliver stronger profitability over the next three years.
The brokerage forecasts around 12% EBITDA CAGR for both companies through FY29, alongside 400-800 basis points of improvement in return on invested capital, supported by higher tariffs, operating leverage and lower capital intensity. It also estimates an enterprise fair value of $110-160 billion for Jio using 10x-15x FY28 EV/EBITDA multiples.
Conclusion
Macquarie believes India’s telecom sector is entering a new phase where subscriber growth alone will no longer determine winners. It expects Jio to benefit from improving free cash flow and opportunities beyond its core telecom operations, while Airtel continues to distinguish itself through stronger returns, capital discipline and cash generation.
Together, the brokerage believes the two companies are well positioned to benefit from higher tariffs, rising data usage and continued investment in India’s digital economy.
Disclaimer: This article summarizes third-party brokerage research, financial forecasts, and corporate valuation metrics for informational purposes only. It should not be construed as investment advice or a recommendation to buy, sell, or hold any security. Readers are advised to perform their own due diligence and consult a qualified financial advisor before making investment decisions.
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