Inside India newsletter: Billionaire Ambani’s mega-IPO faces a valuation reality check amid Musk spat

Key points

• Mukesh Ambani's Jio Platforms will raise up to 302 billion rupees in its IPO next week at a price band of 1,065 to 1,119 rupees per share.
• The IPO values Jio at around $108 billion, down from over $130 billion floated a year ago, and below Bharti Airtel's $117 billion market cap.
• Elon Musk recently called Jio Platforms 'monopolistic' amid a dispute over satellite communications in India.

Mukesh Ambani's Jio Platforms is set to launch its initial public offering next week, aiming to raise up to 302 billion rupees (nearly $3.2 billion) at a price band of 1,065 to 1,119 rupees per share. The IPO values the company at around $108 billion, lower than the over $130 billion valuation floated a year ago, according to a stock filing by parent company Reliance Industries on Wednesday.

The reduced valuation comes as investors push back on Jio's positioning as a tech business. Nomura said Jio's enterprise valuation has shrunk to $118 billion from the $133 billion expected earlier, based on Bloomberg news last week.

Valuation comparison with Airtel

At $108 billion, Jio's equity valuation is below India's second-largest telecom company Bharti Airtel, which trades at a market capitalization of over $117 billion, per LSEG data. Jio's average revenue per user (ARPU) was 214 rupees ($2.25) per month, while Airtel's was 257 rupees for mobile, 527 rupees for home internet and 158 rupees for digital TV services.

Based purely on ARPU, a key telecom metric, Jio's discount to Airtel appears justified, but Jio wants to be seen as a tech company rather than just a utility player.

demonstrate to the world that India can build technology companies of global scale, global capability, and global value

— Mukesh Ambani

Debt repayment and future plans

Jio Platforms plans to use the IPO proceeds to pay off its telecom business debt of 275 billion rupees, according to its IPO papers. Neil Shah, a partner at Counterpoint Research, said this will free up internal cash flows for the next phase of growth, including funding 'gigawatt-scale green AI infrastructure' and a low-earth-orbit satellite network.

Shah noted that global tech majors Meta and Google, which hold nearly 10% and 8% stakes respectively in Jio, are not exiting their investments via the IPO, showing willingness to wait for the next phase. However, Anurag Singh, managing partner of Ansid Capital, told CNBC that Jio has 'no product expertise' as of now and that while Indian investors may buy the tech pitch, 'global investors won't.'