Reliance Jio Infocomm’s recent tariff hikes and strategic moves to monetise its 5G business are seen by analysts as indications of the telecom market leader preparing for an initial public offering (IPO), potentially India’s largest. Some experts predict an IPO could occur as early as next year.
Analysts and industry executives anticipate more clarity on Jio’s potential IPO at Reliance Industries Ltd’s (RIL) upcoming annual general meeting, expected next month.
Read More: Petrol, Diesel Fresh Prices Announced: Check Rates In Your City On July 06
“The stage is now set for the telecom market leader’s much-awaited IPO in the near future,” said Mayuresh Joshi, head of equity research at the Indian unit of US-based William O’Neil & Co.
Joshi and other analysts believe the recent tariff hike and revenue from the 5G business will boost Jio’s average revenue per user (ARPU), a key performance metric for telecom companies, making it more attractive to investors ahead of a share sale.
Brokerage firm Jefferies is keenly watching for any developments on Jio’s listing at the forthcoming RIL AGM. “Rising focus on monetisation could be a precursor to its imminent listing,” Jefferies noted.
Following the latest tariff hike and 5G monetisation initiatives, Jefferies values Jio at approximately $133 billion (₹11.11 lakh crore). At this valuation, a Jio IPO could become India’s largest. Current regulations mandate that companies valued at ₹1 lakh crore or more must sell at least a 5% stake in the IPO. Based on Jefferies’ valuation, this could mean Jio’s share sale would be worth ₹55,500 crore.
The largest IPO in India to date was the state-run Life Insurance Corporation’s Rs 21,000 crore offer in 2022, where only a 3.5% stake was sold as a special case. Hyundai Motor’s India unit has also sought regulatory clearance for an IPO to raise up to ₹25,000 crore by selling a 17.5% stake.
According to The Economic Times report, Mukesh Ambani-led RIL holds a 67.03% stake in Jio Platforms Ltd (JPL), which includes Reliance’s telecom and digital properties. The telecom business comprises the bulk of JPL’s operations. Strategic investors such as Meta and Google hold 17.72%, while global private equity investors, including Vista Equity Partners, KKR, PIF, Silver Lake, L Catterton, General Atlantic, and TPG, own the remaining 15.25%. In 2020, JPL raised over Rs 1.52 lakh crore from these investors.
Read More: Gold Price Today In India: Yellow Metal Rates In Major Indian Cities – Check
Experts suggest that Jio’s IPO could come as its financials improve, driven by recent tariff hikes, with some anticipating another round of price increases next year. Jefferies estimates Jio will deliver 18-26% compounded annual growth in revenue and profit through FY24-27.
Last month, Jio raised tariffs by around 12-25% for most users and adjusted the pricing threshold for 5G services, making it up to 46% costlier. In response, Bharti Airtel and Vodafone Idea also increased their rates by 11-20% and 10-23%, respectively. Currently, Airtel leads the sector with an ARPU of Rs 209 a month, compared to Jio’s Rs 181.70 and Vi’s Rs 146.
The report added that the analysts believe Jio’s moves were essential given the delayed monetisation of 5G services, particularly after investing over $25 billion in acquiring 5G airwaves and establishing a pan-India 5G network. These actions are expected to bolster Jio’s valuation ahead of a potential IPO.
