Like I said, this is the first change as a listed company. I hope you all are kind to me. But welcome to JPL's analyst meeting and we're very happy to be here. Just before I start an introduction to the team, Matthew is the head of our technology and co-leads our international business expansion with Dan Bailey, has been part of the company, Matthew, for almost now 15 years, I've had two stints at Reliance from Infocom days, and then now obviously part of the Gio leadership team from the last 15 years. Anshuman Thakur, I believe most of y'all should know him. If you don't, please do. He's our head of strategy and again has been part of the business for the last 15 years. Saurabh Sanjiti is our CFO, again been part of the the business for the last 15 years. Pankaj Pawar is the CEO and has been part of the company for now, group for now 20 years plus. Dan Bailey has just joined us and was going to co-lead our international with Matthew Oman. So thank you very much. Just some few opening comments. The way I thought we would structure this meeting today is give you the highlights of what we actually saw of the IPO and go into a presentation So, obviously, we're extremely ecstatic about the proceeds of what has happened over the last week and sit and really a process that started in the end of August. Never thought that this would be the outcome, but some of the numbers that we saw is, you know, we were raising 30,000 crores odd. And we saw demand of over seven and a half lakh crores, you know, that's 24.5 times an oversubscription. We saw every investor category broken, starting from QIB to small H&I, big H&I, retail, and all the various shareholders, employees, all of the categories were broken. In fact, the people who were inside the war room on the last day, the QIB category broke in the last 90 seconds. It's overpassing LG and we had a big celebration at that point of time. So obviously, very, very happy for that. But overall, for the India picture, right, we've known how markets are not only in India, but in the global picture. You know, we had foreign outflows of close to 48,000 crores. And in a market situation like that, for us to make our debut, was very proud that the people were realizing of the business that we've spent, we built. Again, they say these overnight successes, I can tell you that we put on our extreme hard work over the last 10 years to build this business, and we'll continue to do so. What was my personal highlights of it? I think, obviously, the demand that we had, I think we have a fantastic anchor book, an anchor book that has not been present in India ever before, both by the international funds and the domestic funds and what we've seen. I'm very, very happy to see tech companies also, tech investors also come in, the likes of Dragoneer, 91, and so on and so forth, and really recognizing us as a technology company. From my point of view, again, it was very heartening to see what happened to the rupee also on the Second day of our IPO after the first day. So that was something that I don't think any other IPO has ever caused. And from my perspective, it was very, very heartening to see that again as a company, we're taking the IPO as just a new milestone and we move on from here. We believe that, you know, the value that we can create over the next decade or so is even more than what we have done in our first decade. And we'll continue to aspire from that perspective. And to end with, I just want to say that I ended my speech in the NSC by saying that one of the learnings that I've always taken with me is that never let today's achievement limit tomorrow's ambition. And that's what we want to carry forward as a company with Jio. So with that, I'll hand over to Pankaj to walk us through quarter two and then handle the Q&A amongst the team. Thank you very much.
Good evening, everyone. So I think probably this is the first time when the entire management team of JPL is present here.
So, in a sense, it shows the true commitment to
what we have been sort of keeping our heads down and trying to deliver over this 10-year period. So, what I will do is probably there is one perspective of how we have looked at the business. I think today's objective is just to give the overall perspective as well because that sets you besides numbers. And probably we know what the questions will come, but I think irrespective of that, still I want to go through the flow of the way we look at the business and some of the things we see it as the real differentiators vis-a-vis other players in the market. So let me take at least at a first objective level, actually. And again, this quarter has been an industry-leading quarter. Again, 524.4 million customers, 36 million year-on-year ads, almost 9 million ads in this quarter itself. And with this, the 5G customer base
has now reached out to 300 million.
So clearly, I think if we just look at the Verizon and US AT&T, I think this is equal to that size. And this has been our clear objective as well, keep increasing the base of 5G, that that's happening. Broadband homes reaching again an important milestone of 30 million numbers, almost 7.3 million year-on-year, and this is one of our main growth engines, and I'll talk about it in a minute. The most important for us always has been, and again, in all the earlier presentations, you would have heard this, that what's the engagement and what's the usage. Now, that number is 44.2 GB per month, almost 14% year-on-year growth again. ARPU has reached now 218.8 per month, 3.5% year-on-year growth, and we'll detail about the growth perspective in the times. Revenue from operation, with that, 40,475 crores. So it's 11.5% year-on-year growth, with that EBITDA is 21,879 crores, 16.6% YOY growth, 54.1% margin. And EBITDA less capex, again, 15,449 in Q2, which is 52.5% year on year. So again, I think for us, it's heartening to see that as we get listed in the first quarter itself, which we are reporting after that period, we are well on our path and we'll explain how we look at how the trend line will move forward from here. I think just to give a perspective, how we just look at the construct of this business. The first part is growth. We have to keep growing, actually. Growth is life, again, in Reliance context, but whether it's growth in mobility, whether it's in home, it's enterprise, where we are, in that sense, we have a much bigger opportunity to chase, and the digital services in a major part, and of course, beyond digital services and beyond India's boundary, whatever Jio wants to do, that's part one. So the growth part, the deepened part, deepened is the relationship with the consumers, and whatever we do through our digital engagements, through the stronger retention, that entire part, how we want to take it forward. The conversion is really the monetization cycle, and how do we make sure that finally the profits and the cash flows through the operating leverage starts moving in, our cost efficiencies, our disciplined capital allocation. This is the pillar indicating that.
And the last part is really where we build our growth engines and whether there are new services, new markets, and how do we see this as a real compounding engine going forward. I think this is the story I want to narrate in these four buckets in a totality level. So first, is the growth exists in the market itself, actually? And when we were on roadshows, this question keeps coming up again and again. Is the market plateauing? Is the market has reached its level where there is no scope of growth? And we just want to articulate how we see that growth still being there as an opportunity, both in terms of volume growth as well as the value growth. So the first part in mobility, we see that today just the broadband of 4G and 5G, if you look at what the numbers look like, the graph in between, the line which shows is 340 million, and that really is the number which is most material. So we see that there is still an opportunity of 340 million new customers getting added to India's broadband mobility base. 240 million broadly of 2G base. This exists with the other operators right now. That means they are not addressable by us, but they are in a sense paying a good amount of revenue month on month to the other operators. But at the same point in time, there is about 100 million which will get added over next 5 years purely because they are reaching the threshold age of the age limit coming into the new base to the market itself. So, 340 million which is really the size of any large country in the western markets, that kind of a market we see as an opportunity for mobility. Now, if you look at currently where we exist, so Jio commands 51% CMS actually in the wireless broadband market, but 60% in the 5G subscriber base itself. So, clearly, we have taken a leading position in this part, and if there is a growth opportunity, we'll keep playing this game in a consistent way. The home broadband side, the way we look at it is right now just about, if we take 330 million odd homes in India, it's about 20% penetration, so almost 60 odd million, 64 million homes over there. We clearly see that by about FY31, there is no reason why India should reach almost about 46% of the penetration in Indian homes. And if you look at the rest of the world, it has reached much higher percentages. So there is no reason why India should not reach. Probably in 2016, everybody said India doesn't need a mobility broadband, and even at that stage, Jio said that, yes, it's an opportunity. We still believe we are extremely optimistic on this 150 million as a potential opportunity in the market, and effectively, that's the growth. Again, if we take a look at why Jio is positioned better versus anybody else, it's because of the technological advantage, what we feel we have versus others. And at the run rate currently, what we are running in is almost twice that of the nearest operator. If you are adding that as a gross base, there is no reason why with the proprietary approaches of technology deployment, we should not keep acquiring at a much faster pace going forward. The third part, which is really the digital economy part, and as India grows, the way we see is there is no reason why India shouldn't reach that $1.4 trillion digital economy. And that's about 22% of the gross value-added framework on the overall economic side, actually. And if really we see that this 1.4 trillion dollar comes in, the whole GEO's model of a digital gateway, and why we call it digital gateways, if any digital service provider has to reach to half a billion of Indians, this is the gateway which exists with them. And let me just take a two-minute break over here just to explain the concept of this digital gateway. It's in any other telco's parlance. They would say that we are just bundling a digital service and offering it actually. While digital gateway as a concept, when we look at it, we say that there is a market to be created. And if the market is to be created, you don't know how that market will move in. So, that means technically you are looking at, I know the customer, probably we know the behavior of the customer, we know the propensity of the customer, which all services they would like to consume. And if you know that, you are targeting them specifically, you are making them aware about the product. By making them aware, you are moving into adoption of a product at the appropriate points in the life cycle journeys. Once that product is adopted, you are making them into utilization of the product and that utilization gets converted into effectively into the monetization cycle. So it's an awareness to adoption to utilization to monetization flywheel and this is easier said than done. And when we are trying to particularly creating a new market for a new service, this becomes quite important. So it's not about just bundling a service just for the billing purposes and billing it to the consumer, but really pushing it. And some of the examples we'll talk about it as the time comes in the presentation. But it's very important that we feel this digital gateway as a concept, whether it is for consumers, whether it is for homes, whether it is for businesses, is a critical part of what Jio is currently pursuing in an overall sense. So clearly, this chart is all about really the opportunity which exists for Jio in the overall market when India moves towards that digital economy. Clearly, the current base in this quarter, 542.2 million consumers, 300 million on 5G, but clearly the net ads, you're on your 36 million, quarter on quarter 9 million. So that line keeps on moving. And I think it's important that clearly that 300 million outside of China becomes the largest base. Top two U.S. operators, this is more of that size. And it's really important that we keep growing this base continuously because that's where the efficiency of Jio's network keeps coming into the place. Clearly, I think it's also important to take a look at when Jio is growing this customer base at a particular run rate, what's happening to the overall market at the same point in time in terms of the net ads. And clearly, those numbers are reported numbers, so I'm not commenting on that. But clearly, I think there is a very clear trend line which is emerging over there over the past one year. And even the numbers which got disclosed by TRAI for the last two days before that, Even that trend line continues over there. So clearly, 5G base moving on to that incremental quarter-on-quarter 15 million and year-on-year 66 million. We believe this is the great opportunity for Jio to keep continuing, particularly when we don't need any incremental spectrum and when we don't need any incremental CAPEX to be deployed, To take our balanced 4G base into 5G, as well as acquire the base from other operators from 4G or 5G of the networks bringing into the Jio. So clearly from our perspective, this 5G is critical.
The base moving from the 4G to 5G of Jio itself is important, as well as moving in the customers from other networks who feel that Jio is offering a better 5G service is also part of that growth line. So the true 5G as a framework and that leading that adoption in the network is going to be the theme as we move forward. Fixed wireless access will be the main driver for our home framework. And by now you know that Jio looks at a customer base not as a service actually. We are not saying you are a mobility customer, you are a home customer, you are a one line customer or you are a two line customer.
Ultimately we are looking at them as a customer unit. So effectively, you may be using my one service or two service or three services. And actually, we finally want to know how much is that Jio can expect from you, whether from the connectivity services or incrementally from the digital services also. So clearly, home is an important element of our overall strategy. And as we move forward, now we have reached to that 30 million mark, almost half of that coming clearly from the wireless access as a framework, actually.
So clearly, 2x of the nearest competitor, it continues to be the largest FWA operator anywhere in the world.
And of course, the UBR, by now, we all know exactly how Jio is deploying that. And effectively, that becomes the core technology as we move forward. Of course, whatever the fiber we are deploying that we use, but certainly I think the elements of the UBR evolution, the way the technology has evolved and whatever work we have done, that allows us to eliminate a lot of negativities which people feel about that technology, and that's why we feel more confident about using UBR as a primary source of our growth engine for the purpose of home broadband. This is where I want to take again a little bit of time to explain the philosophy because I think now it's important that if our journey is going to move forward from here, how we move our flywheels actually. And then the first flywheel is the way our technology element operates actually. And this is where Jio's technology age comes into the play. Many of those things go underlined, but we are saying that if there are unique capabilities within Those we can leverage much better than other telco operators. That allows us to actually play and offer better services in a differential way to the consumers. That allows us to, of course, not just attract the new customers, but include the monetization as well. And that allows us to make sure that effectively we can keep reinvesting in the newer capabilities in the network. And there are many examples of this. One of the examples which you saw in our recent AGM was how we embed the AI capabilities into our voice calls itself. And I think these are some of the capabilities which are unique because of the core, the way we have deployed, the way the network has been deployed within Jio's architecture. And there is a series of such capabilities which will allow us to keep offering the services in a better way. The second part is when you offer this service and just deliver a service and say this is 42.2 GB or whatever is the GB, then actually you are not using the data in a meaningful way. Of course, the data is anonymized, data is completely privacy limited. But having said that, if you are able to use that data more meaningfully to deliver more For meaningful personalized services, that's where the adoption of service starts happening and that's why the data flywheel starts operating over there and again that allows us to offer the relevant services that allows us to monetize the services in a better way. And really the third part is really if you are doing this, how do you do the distribution in a better way? And distribution is not only about physical distribution, the way the physical and the digital part kicks in and how you create those markets. So, if you are moving these three flywheels in a systematic way, that's where really now you are saying that we are not dependent on one line item for increasing the revenue. This is where the line items of how you use this machine to get more revenue per customer starts coming into the play. And that's what the way Jio operates in. Now, when we do that, and effectively, somebody will ask, okay, very good, but what are the sort of evidences of doing that in a differential way? And Gemini was one of the first example. And you see some of the brands mentioned over here. There's a select list of names within productivity, performance, media, and even in some of the case financial services actually. But really this is a long list which is behind this actually. So virtually what you're doing is you're trying to create saying this is the product which I want to push in. If that product is going to create value for the consumer, that's where the wallet share of the consumer I can get it. And if I am able to give something to the consumers that I can, he can spend that wallet share, that money comes to us. And that's more valuable. Because rather than just saying that I'll keep you charging in one particular way, now you're giving more value and you're getting more value back. So clearly, I think it doesn't get restricted only to digital services. It goes beyond digital services also. So some of the financial services what you look at, this is like saying, can I create a market which is a systematic investment plan market? In the markets where it never existed, there are first time to SIP players, individuals, will you get them to do and invest in a SIP? That's extremely valuable. If you're saying a wealth management plan, why a wealth management plan cannot be taken by somebody who is a first time to a job person actually? And if you make him invest that, that whole logic changes actually. So really what Jio is moving towards is the connectivity is an enabler. But keep on bringing on the top of that ecosystem of 1P services. That is the services which we have brought. But the 3P services which comes from the ecosystem players. And if both of these play together, you are creating value. In most of these cases, there are sort of three tenants. The first tenant is the cost of creating this belongs to the other carton. So, if I am creating Gemini as an ecosystem, Gemini's cost will be offered that service did not come to us. That cost was borne by the partner, actually. Second thing is, when you do this, you are actually playing the role of how you are creating India as a market. And again, in the Gemini context, it was not about just saying that how many million customers you offer the service, but it was about if AI is to be used by real consumers, is it a voice AI? If it is a voice AI, can we drive it in not just 12 languages, but you can go into language variants like Tulu and then Magdi and then all kinds of Bijuasi language? Can you drive the consumption from two minutes to seven minutes? Right now it has gone beyond seven minutes actually. So you are actually looking at how the consumption can happen, which finally results into the monetization. This is where Jio plays a role. It is not just limited to that I have done a joint billing and achieved everything. So, there is a cost, there is a way of creating a product. And tell you the same, it's not only the acquisition of a consumer. So, a distributor typically would say that you pay me for distributing your product. But in this case, you are co-creating a market. When you co-create a market, there is a revenue stream which flows to you over a life cycle of the consumer. So, whenever the consumer starts monetizing, the money keeps coming to you. So that's the logic of this whole digital gateway concept. I think it takes time for people to figure out how that works. But as we move along, that each line item keeps creating that as a value addition to Jio's revenue stream. When we do that, this doesn't work only on mobility or home. And I'm just giving an example of how this plays on in the mobility and how it goes on into the home as well. When you do it in the mobility, really you are looking at that you are providing the basic mobility SA network that is allowing you this capability to make sure that the services get offered in an appropriate way. Whether you do the slice, whether you do the unique way of embedding certain things in the core network, everything. But beyond that, are the digital service capabilities you are getting added. Now, I may say that I am just bundling it. That's not display. And that's what I want to make a difference between a pure bundled product versus where we can create a market. And there is a difference in the revenue streams come from both the things. Clearly, I think when you need to do this, you need to give the basic underlying product properly and create the value for the consumer. That means the service experience needs to be precise. Then only your consumption will increase and that converts into GB. And that's why you see GB per consumer continuously going up in Jio's case. So that's the mobility part, which is well understood. But really the other main part is how do you do this at home actually? And home is a critical piece because once in a home you exist, it's literally like you're becoming an OS for the home. And connectivity to the home is not just the last point. Connectivity or getting a customer connect is the point number one. But what you're doing is you're layering a whole lot of services on the top of that. Everybody will say basic internet is a must or TV is a must. That's given. Let's take that as a given. What you keep adding on the top of that, this is where the compute comes in. This is where the cloud gaming comes in. And literally you're saying that we don't need to.
Okay, no problem. So, let me speak into the mic. So, really, when you keep adding into the top of that, and you say that compute in India, compute as a hardware doesn't exist, and you're giving that for, say, 400, 500 rupees, imagine that somebody's paying 600, 700 rupees as a baseline product, and paying that 400 rupees on the top of that, just because your data security gets taken care, compute gets taken care. You put a terminal on the top of that, which is a gaming terminal. You don't need to buy a full console, or you don't need to buy the subscription to the gaming place, and you play on the top of that, you get 300 rupees for that. You put on the top of that the video analytics. You put on the top of that, your set-top box starts acting as an AI gateway into the home. So, it's a whole series of digital services you are layering on the top of that. That's the way digital gateway model gets manifested, whether it's in the hand or at the home. The same way, it gets manifested in the enterprises as well. Yeah, so the same way it is coming in enterprises and enterprises, the way we look at it is a three tiered large enterprises, medium enterprises, small enterprises. And really those small merchants is literally in our case, the way we see that market is almost 80 million small merchants out over there who do not have any CIO, who do not have any ability to get those services in. And when you look at that, the connectivity is the first part, but the cloud and compute, the platforms and security. So you're not offering the services just as vertical line items and saying I'm giving this to you, you take it. But now you're saying I'll offer that full framework to you and you may be a bank branch to which everything needs to be done or you may be a pharmacy store, you need everything to be required and you take that. This is an area where we believe the real opportunity of digital services starts coming in. This is where our highest growth opportunity is and this is what we are focusing on from now on actually. So, clearly, from all these three things, the way we start rolling it up, it adds, adding into the connectivity, plus effectively the digital services play. Saurabh, you want to maybe just talk about the numbers, and then what I will do is, once the numbers are done, I will give you a perspective on how we want to grow the entire article from here onwards.
Thank you. Is it audible in mic? Okay, perfect. Thank you. So, basically, what How do we operate? We have grow which is about getting more users in, acquiring more users. Deepen which means engage them more, monetize them more, give them more services. Going to convert which is about the whole monetization flowing into the overall revenue and EBITDA and cash flows. And finally build, use this to build on further the three fly wheels Pankaj was talking about. So the first part, which is grow. 9.1 million user additions for the quarter, industry beating numbers, taking the total base to 542 million users. And like Pankaj said, we added 66 million 5G users, 36 million overall bases, growing very strong. And we have plenty of room here for growth. 340 million new users to come to 4G and 5G. And more importantly, like we have always maintained a 50% plus market share. So I think the volume growth is there. The second part which is build. Two metrics here which talk about the whole sorry deepen part. One is engagement and the best measure of engagement and the best measure of even quality of customer is the number of GBs a consumer consumes because that means that it is something which consumer has is totally attached to the network. 44.2 GB per user per month. That's the kind of metric. See how it has moved consistently every quarter since the last one year from 38.7 GB per user per month. The second metric, which is ARPU, which all of you are fascinated about, 211.4 going to 218.8. So 7 rupees, purely on a better subscriber mix. But one thing which is very important here is this is just the connectivity business and the connectivity revenue. The digital part of the monetization does not sit here. So where does it sit? Which is the second part of the metric. If you go to financial KPI, standalone JPL. Standalone JPL up 23% year-on-year to 4,881 crores. And this is also part of the convert. If you look at the console, 11.5% revenue growth going to 40,475 crores of revenue. And EBITDA margin, of course, growing faster. 16.6% year-on-year growth to 21,879 crores. And just look at the operating leverage playing out, the overall 250 basis point, YOY expansion in margins. So almost 78% of all incremental revenues are flowing through to EBITDA. Of course, all of this flows through to EBIT, PBT, and finally PAT as well. PAT growing 13.7% year-on-year to 8,387 crores and this is substantial because now all of the 5G asset is capitalized so the costs are flowing through to P&L. And of course, when we do that, what does that do to our cash flows? So one important metric EBITDA less cash capex, which is what we keep focused on. For the H1, it is at 32,130 crores. And for this quarter itself, it is 15,500 crores. That, of course, has led to our net leverage at 0.11 as of 30th September. With the IPO proceeds, we are net debt positive. And I'll do a double click on that as well. I think one more important metric, and this is to show the trajectory. In one quarter itself, from last quarter to this, you see an 80 basis point improvement in return on capital employed up to now 11%. So what is the debt looking like in the balance sheet? Almost 59,000 crores of borrowings. All of these are, of course, 30 September number. You can add the 30,188 crores of issue proceeds to this to know the actual cash position. And plus the business cash flows also. 50,000 crores of marketable cash and marketable securities means a net debt on 30th September was 8.8 thousand crores and leverage of 0.1 times. So, a very healthy set of metrics across, like I said, you have grow, acquire more users, deepen, which means higher engagement, and you get more services per user, the whole digital gateway, which Pankaj spoke about. The convert, the financial set of numbers are already there for you to see and the growth there. And finally, for the build part, also we have a few slides on which we'll talk about. If you talk about the connectivity entity, 35,307 crores of revenue for the quarter, up 10.8% year on year. EBITDA growing faster, the operating leverage is playing here, 14.7% YOY to 20,505 crores. and margin now touching 58.1%. So just summarizing the console, how does the console number look like? I've spoken about these numbers, 11.4% YOY growth, revenue growing to 40,475 crores, 16.6% EBITDA growth growing to 21,879 crores, and of course the EBITDA margins at 54.1%, 250 basis On the build part, there's some exciting things, but I would invite Mr. Aakash to just brief us.
So really what I want to summarize is the pillars of our future growth. And I think we spent a lot of time speaking about how we operate very differently than a telco. The basis of that is our proprietary technology. Today, we have all our integrated 4G, 5G stack covering all our customers. We built our UBR. You've seen that now fixed wireless is 50% of our entire base. New additions also being majorly led by our fixed wireless base. Pankaj explained in detail the concept of a digital gateway and how that is very, very different from a bundling offer. The word that I would use is, especially regarding the Gemini one, is a new market creation rather than, you know, really saying that these are benefits that were passed on to users, and that's what we're seeing, and that's why, you know, we're seeing the numbers that we have with that Gemini growth. Again, enterprise is something that we think is a major growth opportunity. The bottom line here is that India has 350,000 lease lines. Out of that, it accounts to maybe 5% of the total ICT spent. So what we want to double down here and do is to ensure that our digital solutions are the ones that we can churn those users to us And of course, the small-medium businesses that are existing in our country is a unique opportunity. Again, we are the only ones that can address it from broadband connectivity and then layer it from additional services. The international opportunity, I'm sure you all will have questions about, but what I want to say is that, you know, we will be very, very selective about the international markets that we will go to. We will not be selling our proprietary stacks as a hardware commission or our software as, you know, a SaaS service. What we imagine the business model here to be is to be an actually managed service partner with our customers. It's not going to be a heavy capex rollout. You won't see us going and putting up towers and fiber and infrastructure only, but this is something that we think that will be enabled because of the only proprietary stack that we have. Again, to summarize our competitive advantage, the results that you saw is a virtue of all of this. We're the only ones that have a full stack technology across seven layers with a deep engineering and proprietary IP contribution from JPL itself. We're serving consumers, homes, and businesses at a nation scale. The infrastructure is already rolled out to really serve this. We have unmatched distribution capabilities, both on the consumer side and on the enterprise side, a culture of innovation that is driving execution and operating excellence. You've seen our EBITDA margin improve, our ARPU go up in these quarters. And again, multiple growth engines across mobility, home, enterprise, and international that we see. Thank you. And again, we are the ones that are proving this at scale. We are the ones that have a clear path of growth and profitability improving with a very, very strong balance sheet, even before the IPO proceeds come to us. Thank you. We'll be very happy to take questions from you guys as a management team.
Yeah, good evening. Sanjish here.
Yeah, I got three questions. First on India, great story on digital. Can you help us understand the go-to-market strategy in digital? Which are the products we are looking, which will convert into revenue? What is the scale we are looking in the digital services over next two to three years? That's one. Number two on the international business, we have been talking about it for now and a year. Great progress made in India in terms of showcasing the capability. How far are we from doing the partnership which we have been aspiring for last 12 months and how should we think about the revenue contribution from the international business and we have been talking about the partnership model and how is those discussion evolving because this technology edge we have today may not be perpetual, right? We have a lead time, and how are we trying to take advantage of that? Number three is on the capital allocation. We have a very strong balance sheet now. Over next two years, what are the priorities of investment? Where is our capital getting invested, both in terms of CAPEX and the capability building? These are my questions.
Thank you. Thank you. I'll give open comments and then hand over to the domain people to handle that. Let me take question number two for you. See, the international opportunity, I agree with you, has a lead time, but we're the only ones that have, let me take our home broadband, because I want to answer digital services in the same regard. We're the only ones that have actually had this technology actually operationalized on an unlicensed band that is available across any country that we go. What we want to be very, very careful about is the business model. I just gave you how we want to do this. You know, majority of the research reports that I've read is saying that will you go and be a heavy capex business as we roll this out? No, we want to be a technology led business there. Speaking about just our home broadband in a matter of three years, we've rolled out now four generations of technology that have proven that we're the ones that are moving at scale, operationalize And moving faster. In terms of the market opportunity, see, it has to be sizable. You know our numbers right now. You know, from our perspective, going international and being a meek player or having that build up is not going to be the opportunity that we chase. We want to think maybe 10 to 15 partners that give us really scale. And again, what I want to highlight to everyone is like, you will think this is only for the developing markets. It's not. It is for the developed markets also. And just a simple fact, FWA consumption in USA, right? 3% of the customers clog up 65% of the FWA capacity on 5G, right? And those are the kind of markets that we have. If you go east of India also, you'll see very, very high ARPU markets that we can go and chase. So we have the operating leverage from going from, again, to remind everyone, we are ARPU of almost $6. And our operating cost of our UBR is almost $3. So we can really play from the high ARPU markets to the low ARPU markets. We want to be very patient to have the right partnership model that we go in and do. And that's what we'll do. What I can tell you is that because this, and especially on our home broadband stand, but as much as on our integrated 5G stack, right? We've had numerous numbers of CEOs and CTOs visit us to see our technology and see how we have scaled this in India, right? And the way you should think about is that we want to design this, we deploy it in India, and then we export this. So, sooner rather than later, I have two gentlemen who are here, Dan Bailey and Matthew Oman, and they have the mandate to take this, you know, very, very global. But, and that's, that's something that we'll focus on. On the digital services side, I think you've seen our revenue growth already quarter on quarter. Thank you for your comments for that. I would say you take our home example today, right? Today we have 30 million homes. The stat I want to take you to is that 93% of our customers use our OS over connected TV OS to really connect to their digital services. We're seeing an OS share already be part. What we don't want to do is we don't want to, like Pankaj said, split this into saying he's a tele OS, he's a broadband customer. It's a single customer, much like the Apple ecosystem. Today, you don't say I'm an iPhone customer, I'm a different iPad customer, I'm a different Mac customer, I'm a different Apple Music customer. There's one view of the customer. So that's what we'll keep on driving for the digital business. What we want to focus there is on actually how our motive, our competitive advantage is something that the customers benefit from. For example, we see this like in a fragmented universe where if you're not taking our home proposition, right, the customer ends up paying, even for the 13 OTT apps that we bundle, almost 15% higher costs. So that's what we want to keep on working on. But of course, our focus on the moat is the customer experience that we deliver to. So we'll keep on playing on that. Our voice AI, we're very, very optimistic about, you know, the use cases that we're going to bring to it. And again, you'll see that play out in the coming quarters. Sorry, on the last business was capital allocation, right? I think for us, we are finding a sweet spot in, you know, developing these technologies. And we recognize that these are the things that we have done now with internal JPL engineers and everything, but that may not be the only way to grow. I think if we find in a traditional Indian way or one plus one equals 11 kind of acquisition, then we can evaluate those and then do that. Because what we see is that we're the only ones that can actually operate at a leverage that we have seen anywhere in the world. I mean, our FWA numbers is also showcasing that our mobility numbers, as Pankaj said, is the combined of AT&T and Verizon put together. It's almost more 5G customers on Jio's network than all of the European operators that have. So that's what we'll keep on be focusing on. And then we want to make sure that there's a very healthy balance sheet for any opportunity that we want to look to address. Because we think we're uniquely positioned to address opportunities compared to anyone else. From our home service and mobility, you're talking? So, again, in our home business, you're not getting a different broadband bill, you're not getting a separate OS bill, you're not getting a separate GeoGames bill, you're getting one bill from a customer point of view, right? And from a Converge offering, we're focusing on the Converge go-to-market, right? So that we can drive that and then we will be able to say, okay, of course, we won't like it that we have one Converge bill for everyone. But I think those stories are still to play out as well as we want to.
Sachin
Analyst — BofA Securities
Can I go next? Hey, Sachin from Bofa Securities, three questions. First question, clearly, what differentiates you guys versus competition is their digital story. So, I'd love to understand, you know, what are some of the aspects which will take digital ARPU up? Mankaj did mention about enterprise being a key focus. So, beyond enterprise, you know, what are some of the areas we should think about and what could be the impact of these services on margins? So, that's question one. Question two, again, you know, when we think about capex and investments, clearly 5G standalone investment is done. JPL is an asset light entity. We don't have content costs. We don't have data center investments. So logically, free cash flow should improve in a meaningful manner. So is the growth is life philosophy of reliance is also applicable here or we should see some dividends coming from JPL at some point in future? Sure. And third, you know, just wanted to double click on this point about taking the business internationally. And it's, you know, would love to understand what kind of technologies is something which is gaining traction. Is it let's say your UBR stack? Is it this entire full stack technology? Is it a disaggregated 5G network between hardware and software? So where are you having highest engagements? Does it vary from emerging market? and developed market telcos, and when could we start seeing, you know, more contracts, you know, being signed up out here? Thanks.
Dan, you want to take the last question and then hand over to Matthew on which tax?
Sure, thank you for that. In terms of the international where's the most engagement, we're most focused really, I think, on two product areas, which are UBR, obviously. As we keep on stressing, it is a unique product. I don't want to in any way sound complacent, but the question came before about The window of opportunity there, we still believe we're several years ahead, and we're obviously not standing still. We're continuing to iterate generations very rapidly, so we feel confident we'll attain that lead, and that's a product that nobody else can talk to anyone about, frankly, at this point. The second one, of course, is the full stack, the OSS-PSS. That's a more complicated delivery conversation with a telco, as you can imagine, because this is absolutely the guts of their business. And that is something where there's a lot of interest, and we've had people, as Akash mentioned, coming to talk to us about both for quite a long period of time. I'd say we're having an equal degree of engagement on both. In terms of locations and places and timing, obviously, I'm not going to preempt anything at this stage. We're obviously trying to move quickly, but these are not something that you can force. This is a two-way conversation because we're talking about partnership discussions here. Again, to reiterate, this is not something that we go and buy company X or we just turn up and take large stakes in company X and then have a conversation. This is about we have a joint venture. We have some kind of partnership arrangement where the two of us come together recognizing the value creation that's there.
Sure. I think what Akashin earlier said and what Dan explained, any market, whether it is India or the world, I think what we are seeing is entities are capital constrained, spectrum constrained, and then there is the new growth area that is driving it. To your specific question, we believe home broadband is the biggest driver and delivering not just as connectivity, but also as intelligence, as a capability on home broadband. So that is one. What is the uniqueness? The home broadband technology stack end-to-end, which is the system stack and the technology stack. Why is it that we will be extremely credible? It is not just because we have deployed such a scalable number in India, but because the technology leadership that we have, you scan the world. I know the other gentleman had a great question. We don't always continue to have the leadership, because leadership is a time domain attached to that, and it's a great question. What we have done is we have scaled globally on all the different players who have now UBR and or we would say LBR. Why I'm going to use the word LBR, Licensed Broadband Radio. We saw a big announcement from a U.S. carrier in their earnings call a couple of days ago. First time in the world that carrier said, I'm going to do a non-3GPP technology. You know, 3GPP, i.e. the basic standards on which 4G, 5G, and the planned 6G is. So the world is adopting a technology that is so prevalent even in our room right now, which is called Wi-Fi, across the ability to deliver FWA, whether it is in a millimeter wave spectrum, which is the licensed spectrum, Or an unlicensed spectrum, which is ours. To answer our technology leadership, we do find another three players in the market without naming the technology company. When we looked at the analysis about a few weeks ago as part of our own roadshow, we think we are at least two and a half, three years ahead of the nearest competition. So that edge we will have in addition to all the collective things that we did. Hopefully that helps.
Growth is definitely life. Don't think any which ways otherwise. On dividends, you know, reliance has always led the way and decided we will be trying to follow the same things. But obviously, we need to see our first year as a listed company, learn as a company, know what we want to do, and definitely want to focus on the market opportunity ahead. On the free cash flow, let's sort up.
Yeah. So, I think what we as management are very clear about is maximizing free cash flows, and it can be done through two things. One is the operating leverage. We spoke about the 250 basis points improvement, YOY in EBITDA margins, and that efficiency is going to continue. That is how we are driving the business. And the second part is on CAPEX, because the peak CAPEX is behind us. And for all the growth and opportunity which Ankaj was speaking about, whether it be about these 340 million new users in mobility or homes, the large part of CAPEX is already done. So for the next four or five years, I don't see it exceeding what we did in last year. So, that way is the free cash flows would grow. And all the growth trajectory therefore in front of us does not require a significant amount of capex than what we spent last year. So, there would be dividends and more.
Sachin
Analyst — BofA Securities
Got it. And first question in terms of integration.
So, I think Sachin, the digital services revenue will come in all three parts, not just in enterprise, it will come in home. Home more so actually because virtually there is no single highway running over there. And you keep running on the top of that, and mobility as well, actually. So, home is some of the services which I talked about. The biggest opportunity is in enterprise, followed by home, and mobility, just because of the scale, it will keep coming. So, clearly, there are identified opportunities in 1P, and identified opportunities 3P goes all the way up to AI services, democratization, giving it to consumers, all the way it goes in. Thank you.
Guys, if I can ask for everyone to get a chance, maybe stick to one question.
Yeah, hi, this is Sumangal from Kotak Securities. I have one question on Arbu. Saurabh correctly said that we all are quite obsessed with tariffs and Arbu. So, I mean, it's been now almost two and a half years, and a lot of investors who have been now apart are anticipating some action. We've also seen the GeoPrime introduction and some modifications by a few peers in their entry-level plans. So, what are your thoughts on external tariff hikes? Also, these macro issues, what we are facing and elections, all these things are a driver there. So, thoughts on ARPU and tariff hikes would be useful.
I was anticipating this as the first question, And so I'm grateful that it's the seventh. And no, see, on ARPU and Tarifike, you've seen our ARPU increase, you know, the firstly, what it was in quarter two of last financial year and where we are right now, and then quarter on quarter also. So what we want to stress as a company, we don't want to use that as the only lever of growth. What we want, we have a capability of creating a technological moat. And we want to stress that that is, you know, a more sustainable way of doing it. Like you rightly pointed out, you know, almost two and a half years since we last did it. And on the specifics, I'll let Anshuman handle this because he feels very passionately about it.
They all know that. The tariff-related decision has several considerations that go into it. It's not only the investors who have come in, or it's about the market dynamics, it's about macro, a bunch of things. We don't want to be dependent on it. At the right time, those can happen. We want to focus on how we are adding more value to customers and thereby increasing the realizations that we have from the customers. Even today, if you look at our growth trajectory, ARPU has grown by almost 3.5%, around 4% to 5% growth in ARPU just because of the customer mix changing, people consuming more, is happening organically. Our realizations from customer has grown faster. The bid which goes into JPL, which is where we are offering digital services and customers are paying for that separately, is growing faster. And that's a focus area for us. And, you know, for us as JPL Consolidated, we want to maximize what we get from customers by offering the best value to them. ARPU is just one part which comes from the connectivity that we provide to them. That from, you know, at the right time, based on all the considerations, we'll take a decision. But we want to focus much more on the digital services that we are offering to our customers.
Gaurav from Morgan Stanley. Just would like to delve deeper into your international strategy. You talked about 10, 15 partnerships. If you could spill the bins in terms of whether it is going to be technology companies, whether it is going to be telecom companies with which we can strike partnerships. And if it is going to be a telecom company, while we have a significant
We don't plan to give our technology to any of the domestic As a global competitor, really, it's opening up new growth engines for our potential partners, right? And that, I think, we've been visited by every single company that wants to, has interest in growing their home broadband pace and add more services on top of, you know, integrated into its core, on top of our voice and voice AI and, again, So really, from that point of view, we've not seen that kind of friction coming from the early stages of our conversations with these potential partners. And the 1015 number is because we want this to be material, right? Obviously, you know, around the world, 205 odd countries that have 5G SA rolled out. Doing FWA rollout. We obviously can go to all of them. We have the capabilities of serving each market, but we want to make sure that these are sizable, and that's why I spoke about the 10-15 number, right? And that's, you'll be able to triage that list very, very quickly. Matthew, Dan, you want to add anything to this?
I'm happy to add, I think Akash explained it well, but just to the gentleman's question from Morgan Stanley, with respect to conflict of interest. As you know, we already own a company called Radices, which is a technology player. It gives technology to 223, 24 operators globally today. And where we are going to do is we are not going to go compete in the market for ourselves directly. We would make sure that that's the partnership model. There will not be a scenario by which you can be the provider and the partner together, to answer your question. And I don't think you will see such a partnership from us. You will see a partnership that is extremely strong in line with effectively and efficiently managing that conflict. But we've had this model through Radisys as an example of testing the market to see how that is happening. And I think Agash, I mentioned about the team coming to India and experiencing that.
Sorry not to pile on, but I think the critical thing here is that every one of these telcos is facing the same issues that we've already faced. And we're going there to solve their issues. So, it's fundamentally, as Matthew said, it's a partnership. There really is no conflict. They have a problem. They have no solution to it. We come to them, and their eyes open wide.
In the interest of time, maybe last couple of questions. There are a few hands raised already. You were late. Sorry. Your turn will come.
Kunal
Analyst — BNP Paribas
Kunal from BNP Parivas. My question is on AI monetization. Just wanted to check. Like, in China, we are seeing some telcos starting to charge for AI tokens. Is that something which you would look to, like say, start, like say, not like immediately, but in the medium term, do you see that as an opportunity? And also, like as the Gemini offer, which you have right now, which is free for about 18 months, once that expires, would this become pay? How do you think about monetization for retail perspective?
Sir, can you repeat the Gemini question again?
Kunal
Analyst — BNP Paribas
The Gemini currently is being offered for free. Once the free period expires, would you look to start charging for that service?
Yeah, I think, but there's still a lot of time for the free period to expire. The initial deal that we signed was for 18 months. I think we're not even close to almost 12 months.
12 months and then 18 months of service for anybody who had subscribed to it, free service from the time they subscribed. Right.
So, and to be really, I think we and Google obviously have a great relationship there on our cap table, and what they also want to see is the growth of AI in India. On the question of token charging, first, we are in the business of actually democratizing technology, right? And that we'll see, we're seeing evolving business models around that in the world. Of course, we're learning from what China does, but China's market is very, very different to anywhere of, you know, democracy anywhere in the world. And we want to be learning from everyone and then taking a firm view of how we want to go ahead with what I would say is that the diffusion of AI products, we think is best done through a telecom harness. And what I mean by that is take our voice AI product that we're going to launch immediately, right? We will be providing this to our entire base of our customers and really, sorry, I see better when I see the person, but we will be reaching the full scale of our customers and providing this as a universe access to these products through a telecom harness. So, those are a little bit of, you know, beams that I've just built for you to think about and model as we go on.
Maybe one last question now. Thank you.
Speaker 1
Risk. Although recently, whether it's T-Mobile CEO or Verizon, they've said that Starlink will need a terrestrial network. They will need Spectrum, and in US, Spectrum is for life. Those companies are already, I mean, dismissing that threat, but market is thinking otherwise. Obviously, Starlink has aspirations for India as well. How does, you know, like, do you think, not immediately, obviously, because their service has also been called an inferior FWA, so, but in the longer term, three years, do you foresee, particularly when there's a terrestrial network available in India for probably a strategic partnership?
Matthew has been part of the leadership teams of the U.S. Selco, so I'll ask him to try with specific details. What I would say is that if you just break down the two use cases, which is mobile and then home usage, what we are able to do today is that cover 99% of India's homes. And you know the statistics in regard to data connectivity in our home. And from my perspective, as long as we keep on giving that value to the customers, we'll see a growth rate. And what we want to stand for is that, as we said in our statement, is that we always welcome competition. But let the customer choose of which one. On the specifics of what the US one, Matthew will have the best insights amongst us as a management team. So I'll let him answer it.
Thank you, Agashmay. I think great question, man. And I think when you think about satellite, you should think about it in four different domains. There is broadband. There is direct-to-device on your phone. There's navigation. And then there is earth observation. Those are the four categories of services the satellite offers. The good thing is, I don't think it's the Verizon CEO or the T-Mobile CEO who saw that even if you could have 15,000 satellites or 50,000 satellites, this was said by the startling CEO that they might need about 80,000 terrestrial things on top of that. Just simple metric, ma'am. Direct-to-device, a satellite covers a beam of about 50 kilometers to 100, 200 kilometers, one beam. That means that comes from the sky. A terrestrial network covers 700 meters, one kilometer, two kilometer. That, if you just imagine, just a simple math for all of us, 20 megahertz of an LTE spectrum that we are used to, if it can deliver spectral efficiency of two, that is 40 megabits in a 50 kilometer beam. What that translates from a direct-to-device is only 20 kilobits per square kilometer. That is the reality of satellite from D2D. Having said that, ma'am, we don't underestimate any competition. We sincerely believe we have to respect competition, learn from it. And as you know, we ourselves have announced, without you asking a question in terms of a LEO satellite system, as a complementary solution, but also we believe more as a nation building because India needs a sovereign ecosystem outside of the four categories that I said. Hopefully that helps, ma'am.
Speaker 1
Yeah, thank you.
Speaker 1
And on the homes bit, just one bit. Since now UBR is more full-blown versus earlier where there was a greater focus on 5G FWA, can we expect more acceleration on the homes front?
Definitely our aspiration. Yeah, thank you. We'll take one last question. I know he's been raising his hand, so.
Thank you for taking my question, Manisha, Goldman Sachs. Now that you're a separately listed company and you've talked about qualitatively your growth aspirations or different buckets in which you want to grow, but are there any financial metrics that you can share with us which will make you happy over, let's say, a five, seven-year period? Could it be returns, market share, margins, any of those? That's my first question. I'll let you maybe answer that and come to my second question.
No, no, no. Definitely all three. Not want to be, but see, what we want to really do and the way we run the business on a daily basis is saying, can we give more benefits that no one else in this country can give? And that's also the play that we want to do internationally. And that we'll be very, very focused on. I think if we continue to solve those hard problems, Manish, and I think the finances will only follow, like I don't know if you realize this about our full year results last year, we ended FY26 with $8.5 billion of EBITDA, where amongst three other companies globally that have done so, right? So, we want to improve on all our, but the basis of expanding our business will always be providing disproportionate value to our customers. From a KPI standpoint, you know, we want to improve on every single one of them, market share, actual deployment of our technologies, seeing an ARPU uplift because of the services that we're going to give, and we'll keep on tracking those. But it won't change the way we want to approach the business from giving disappropriation value to our customers.
Thank you. If I can just squeeze in one more question. You, of course, have market leadership in a lot of products and services that you operate in, particularly wireless and homes. But in your opinion, are there parts of your businesses where you think competition is doing better than you? Could be domestic competitors or elsewhere in the world where you think you have maybe places where you can catch up to and replicate what they are doing and, you know, get better in those aspects.
So elsewhere in the world, like I said, is we're setting up this international team with zero customers and zero revenue. So they have only to grow from here. You spoke about the segment that you missed out on. And I think that we see as a major growth, unlock strategy, which is the enterprise. And we, again, to reiterate, we don't want to pay for only the 350,000 lease lines that are prevalent in the country, but we want to expand that market very, very quickly.
Thank you, and congratulations on the listening.
Thank you very much, everybody.
