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Mumbai: Reliance Industries’ telecom venture Jio’s performance has been praiseworthy in the financial year ended March 2018 and so is the cash burn, said HDFC Securities.
The brokerage said that Jio, which has spent Rs 2.4 trillion cumulatively up to financial year 2017-18 in becoming a digital behemoth, is likely to spend an additional Rs 400 to Rs 500 billion in capital expenditure in the current financial year, and another Rs 150-200 billion to acquire the telecom assets of Reliance Communications.
Investments may also be required on fiber-to-the-home (FTTH) subscriber’s acquisition, said HDFC Securities.
With high debt and cash burn for all the telecom companies including Jio, HDFC Securities believes that the three players may raise tariffs which could be positive for the sector.
“Jio may continue to fund the cash burn from its robust oil and gas cash flows and thereby corner the competition.
With high stakes in the business by the trio (Jio, Bharti and Idea-Vodafone) and possibility of capital infusion, we have pinned our hope on improvement in industry dynamics,” said HDFC Securities.
The Vodafone-Idea combination may pull up the competitive ante as the merger consummates to regain the lost momentum, said the brokerage.
