Global investors reached conclusion that RJio is king of Indian Telecom: Bernstein

"At our last model update in December, we proclaimed Reliance Jio the new King of Indian Telecommunications. Since then, we have seen a multitude of international investors reach the same conclusion," it said.

Facebook kicked-off the party, investing Rs 435.7 billion ($5.7 billion) to secure 9.99 per cent stake at a $65.95 billion pre-money enterprise value and this was closely followed by a further Rs 607.5 billion($8 billion) in investment spread across 8 different private equity investors.

All together, Reliance has monetized 22.4 per cent of Jio Platforms and raised Rs 1.04 trillion ($ 13.7 billion) in the process.

"While we expect strategic cooperation between Facebook and other parts of the Reliance Group, we believe most of the other investments are passive. Reliance gets access to much needed capital to assist in paying down debt, and these investors get early access to the leading Telco platform in India," the report said.

"We expect an IPO of Jio sometime over the next few years as its market share approaches 50 per cent. By then ARPUs will have improved and we expect service revenue will double over the next three years. Based on our updated model, we see potential upside of 30 per cent by FY25 at fair value. Returns will likely be higher as retail investors clamor to get a slice of what will be the undisputed scale player in Indian Telecoms," the report said.

"With all the positive news regarding investments in Jio Platforms you might expect we would become more optimistic regarding the value of the company. Instead we have become slightly more pessimistic about the near-term and have taken down our numbers," Jefferies said.

The key reasons are two-fold: Covid-19 and the resulting shutdown has likely reduced the rate of gross additions to the platform. "While we expect this to recover as India reemerges from lockdown, we take down our numbers for the year and this has a flow on effect," it said.

The price increases in December have a more muted effect on Jio's ARPU than Bharti's and were lower than expected.

"We think lower value JioPhone users having already increased their Telco spend (to increase their data allowance) may have found further increases harder to absorb. More of the Jio base appears to have down traded than for Bharti. Post these changes we forecast Jio to reach 48 per cent subscriber market share and 44 per cent revenue market share by 2025," it added.

The big unknown remains the on-going viability of Vodafone Idea. This is linked to the resolution of the AGR issue, which remains before the courts. "Our default assumption is that a resolution will be found that allows Vodafone Idea to continue to be viable. This requires a long payment plan as well as a recapitalization of the company. Without this we expect the company to be pushed into administration," it added.

Both Jio and Bharti would gain subscriber share from this action but might face greater regulatory scrutiny as a result -- particularly with regard to pricing.