It’s raining big IPOs. After the NSE filed its Draft Red Herring Prospectus (DRHP) with SEBI on June 17, Mukesh Ambani-led Jio Platform filed the much-awaited IPO draft papers. Telecom companies rely heavily on spectrum and licensing, but that’s not the only risk Jio Platforms has to tackle.
Network and infrastructure disruption, complex regulatory environment, and other risks are linked to Jio Platforms.
Here is a quick look at the key risks detailed in the Jio Platforms IPO DRHP. This will help investors make an informed choice.
Spectrum and licensing dependency
Reliance Jio’s operations depend entirely on maintaining and renewing telecommunication licenses and spectrum across different bands. Any inability to renew these licenses or unsuccessful bidding in future spectrum auctions could materially harm the business.
Network and infrastructure disruptions
The business relies on the uninterrupted performance of its network and passive infrastructure. System interruptions, server outages (like the two-hour Gujarat outage in FY26), or fibre cuts can lead to customer churn and regulatory penalties.
Jio experienced an outage of its 5G mobility and JioAirFiber services specifically within the telecom circle of Gujarat.
Technological obsolescence
The connectivity industry faces continuous change. If Jio fails to upgrade networks on time or if satellite-based connectivity becomes a more cost-effective disruptor, current offerings may become less competitive.
Jio heavily utilises Unlicensed Band Radio (UBR) technology for its JioAirFiber services. Because this spectrum is unlicensed, it is shared with other users and devices. As deployment density increases, Jio may face significant signal interference that it cannot legally prevent, potentially degrading the “fibre-like” experience it promises.
Complex regulatory environment
The telecommunications sector is highly regulated by the TRAI (Telecom Regulatory Authority of India) and the DoT (Department of Telecommunications). Changes in laws, such as increased license fees (currently 8% of Adjusted Gross Revenue) or broader definitions of taxable revenue, could significantly increase financial obligations.
Concentrated distribution vulnerability
While mentioned as a strength, Jio’s dependency on Reliance Retail Limited (RRL) is massive. RRL is the sole distributor for prepaid connectivity services, which accounted for 77.08% of Jio’s consolidated revenue in FY26. Any operational crisis within RRL would effectively throttle Jio’s primary revenue stream.
Declining capital efficiency (RoCE)
Despite massive revenue growth, the company’s Return on Average Capital Employed (RoCE) has trended downward, falling to 10.76% in FY26 from 12.83% in FY24. This suggests that the incremental profit generated is not keeping pace with the enormous scale of capital being deployed into the network.
Intra-group cannibalisation
The DRHP notes that other Reliance Group entities (like Hathway and Den Networks) have 16.74 million broadband and cable subscribers. Jio’s aggressive push into JioAirFiber directly competes with these sister companies, creating potential governance friction with the minority shareholders of those other listed entities.
Under-insurance of physical assets
As of March 31, 2026, the company’s insurance coverage for material damages was Rs 1.37 lakh crore, which represents only 43.57% of its total tangible gross block and capital-work-in-progress. Major assets like spectrum and right-of-use assets are excluded from coverage, leaving more than half the physical value of its infrastructure effectively self-insured against catastrophe.
Conclusion
All in all, Reliance Industries has carved out its telecom entity, Jio Platforms, to create value for investors. However, the risk associated with the company is also detailed in the DRHP for investors to understand the challenges.
