Jio’s Interest Burden Is High, Yet Its Funding Pattern Is Comfortingly Normal

After all, Jio Platforms’ IPO is set to be the largest India has seen so far. It has all the ingredients of a blockbuster capital markets story: a dominant digital platform, a sizable equity raise, and a promise to reduce debt.

At first glance, the deleveraging narrative appears straightforward. Jio’s balance sheet has already improved materially, with net debt-to-EBITDA falling from about 0.88 times in 2023-24 to 0.36 times in 2025-26 as cash generation caught up with the 5G rollout. On that measure alone, the company enters the market looking far stronger than it did during the peak of its investment cycle.

Yet while total borrowings declined only modestly—from about ₹7.31 trillion in 2024-25 to ₹7.08 trillion in 2025-26, finance costs surged 76.4% to ₹865.34 billion from ₹490.51 billion. According to the company, the increase was largely driven by interest on 5G-related deferred payment liabilities, borrowing costs that had previously been capitalised and were subsequently recognised as finance expenses, and higher interest on lease liabilities as leased assets expanded.

Why did this happen? During the build‑out, Jio used tools that most capital‑intensive projects use. It agreed to pay for spectrum and equipment over time through sizable deferred payment schedules. It took long‑term loans and capitalised part of the interest into network assets while those assets were under construction. It scaled up leases for towers and related infrastructure, creating lease liabilities with an interest component under current accounting rules. None of this is unusual. It is a standard way to match the life of a network to the timing of its cash outflows.

Financing Shift
The effect lands with a lag. Once 5G assets are ready for use, Jio stops capitalising interest and begins to expense it, so borrowing costs that previously sat on the balance sheet flow into finance costs. As deferred payment schedules progress, more cash interest is paid on those liabilities. As leased assets grow, the interest element within lease expenses rises. Together, these factors explain the sharp increase in finance costs in 2025-26 even though total borrowings edge down over the year.

The cash-flow statement reinforces the point. In 2023-24 and 2024-25, financing activities generated net cash as fresh borrowings more than offset interest payments and lease outflows. By 2025-26, financing activities had turned into a net use of cash as the company paid higher finance costs, reduced borrowings and serviced larger lease obligations.

The maturity profile also suggests that the story is more nuanced than a simple debt reduction exercise. While near-term borrowings have moderated, substantial obligations remain in longer-dated buckets, including deferred payment liabilities that continue to carry interest costs. As a result, the interest burden may prove more persistent than the headline borrowing figure suggests.

That does not mean the IPO proceeds are irrelevant. Repaying debt should improve leverage metrics, strengthen interest coverage and reduce refinancing risk. But it will not automatically unwind the financing structures that currently shape the company’s interest bill. Deferred payment liabilities, lease-related finance charges and the transition from capitalised to expensed borrowing costs will continue to influence earnings even after debt is reduced.

For investors, therefore, the more useful question is not how much reported debt falls after the IPO, but how quickly finance costs moderate relative to revenue and operating profit. Jio’s balance sheet has undoubtedly gained breathing room. Whether that translates into a meaningful boost to earnings depends on how rapidly the business grows.