Jio Platforms' bull-case value seen at $110 billion by FY22 on ARPU growth: BofA Securities

A combination of factors, including a rise in realisation per user, good traction in broadband and enterprise offerings and its apps gaining scale, could drive Jio Platforms' "bull-case" valuation to $110 billion over coming years, BofA Securities said on Tuesday. After Facebook's 10 percent stake in Jio Platforms Ltd (JPL), nine PE firms bought 15 percent stake in JPL valuing it at $66 billion.

"In our JPL bull-case valuation, when we model FY22 cellular ARPU (average revenue per user) of Rs 200 (current Rs 131), good traction in broadband/enterprise offerings and a few of Jio's apps gaining scale, we estimate a value of $110 billion, implying significant upside potential," BofA Securities said in its latest note.

Connectivity business (that is mobile, broadband, and enterprise) will be the driver for the next five years, and after which, it will be services (ad, app subsciption, internet of things), it said.

"Partnerships with Microsoft, FB should help JPL offer best tech offerings to users/SMEs. Debt concern is behind us with RIL raising $21 billion in less than 2 months (higher than the entire tech start-up industry raised in 2019)," it said.

Outlining a "bull-case" scenario, the report said it expects Jio's ARPU to stabilise to Rs 250 (and not Rs 300) in the long run as it expects Jio to earn incremental revenues via ads and app subscriptions, among others.

Further, with cellular investments behind, Jio is focusing on broadband roll-out and targeting small and medium enterprises (SMEs) where it could offer bundled pack with Microsoft.

"Given Jio's focus on making services affordable, we estimate subscription to Jio's apps -- mainly entertainment (content/music/games), ed-tech and health-tech to be Rs 55-65/month vs industry norm of Rs 100-150. This might lead to better uptake of paid subs and we estimate Jio apps to contribute to $9.5 billion value," it said.

Digital ads is also another revenue opportunity given its access eventually to 500 million mobiles, 20 million broadband users, it said adding, "We model a modest market share of 6 percent by FY22.

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