According to a report by ICICI Securities, Bharti Airtel (Airtel) and Reliance Jio (Jio) are poised to nearly double their returns on capital (RoC) by financial year 2027-28 (FY28) as network spending falls below depreciation costs, freeing up strong cash flows after more than 15 years of heavy infrastructure investment. The report said both companies are entering a “value creation zone,” marked by rising return on capital employed (RoCE) and robust free cash flow. Airtel’s RoCE is projected to almost double from 14.2 per cent in FY25 to 28.4 per cent by FY28, while Jio Platforms’ RoCE is expected to increase from 14.3 per cent to 21.4 per cent in the same period.
The report mentioned that Jio, which is preparing for an initial public offering in the first half of 2026, could be valued at around $148 billion by September 2027, the report estimated. Its free cash flow is forecast to triple to Rs 558 billion by FY28.
The report noted that both operators are now spending less on building and upgrading networks than the annual depreciation of existing assets, allowing them to retain more cash, improve profitability, and start recovering their earlier investments. This additional cash flow will be used to reduce debt and increase shareholder returns.
Further, the report attributed the financial turnaround to stable pricing and rising adoption of 5G services, which carry higher average revenue per user (ARPU). It also noted early signs of tariff restructuring that could further strengthen revenue stability.
As per the report, Jio has already achieved 46.2 per cent 5G penetration among its 507 million subscribers, representing 65–70 per cent of India’s total 5G user base. The company is pushing users toward higher-priced unlimited 5G plans that start at 2GB per day, compared to 1.5GB earlier, a shift that raises tariffs by 17–30 per cent over 4G plans.
Furthermore, both Airtel and Jio are also diversifying beyond mobile services. The fixed broadband segment is projected to grow at a 15.4 per cent compound annual growth rate (CAGR) through FY30, reaching Rs 522 billion across the industry. Enterprise digital services including cloud computing, cybersecurity, and managed IT solutions are emerging as high-margin growth drivers. Airtel’s home and enterprise business is expected to grow at a 29 per cent CAGR through FY28, compared to 6.3 per cent for its core mobile segment.
The report characterised FY12–20 as a phase of “capital destruction” for Indian telcos, marked by low returns due to costly spectrum purchases, rapid technology transitions, and intense price competition. FY21–25 is described as a “value protection” period, where returns stabilised but high investments continued. The upcoming FY26–28 phase is seen as the beginning of a “value creation” era, where years of investment will translate into higher profits and shareholder value.
Between FY12 and FY25, Airtel invested Rs 2,135 billion in capital expenditure (capex) and Rs 1,550 billion in spectrum acquisitions, totalling Rs 3,685 billion. For the first time, its FY25 capital spending of Rs 266 billion fell below its depreciation of ₹283 billion. In addition, the report highlighted that over FY26–28, Airtel’s projected capex of Rs 531 billion is expected to remain well below depreciation of Rs 827 billion, generating free cash flows higher than profits and accelerating debt reduction.
