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Reliance Jio heading for an IPO? Tariff hikes, 5G monetisation moves hint at listing; could be India’s largest

Reliance Jio Infocomm‘s recent actions, such as increasing mobile tariffs and starting to monetise its 5G business, suggest that the telecom market leader may be preparing for an initial public offering (IPO) that could potentially be the largest in India’s history, according to analysts. Some anticipate the IPO to take place as early as the beginning of next year.
According to an ET report by Kalyan Parbat, industry experts and analysts anticipate that more information about Jio’s significant IPO will be revealed at the annual general meeting of its parent company, Reliance Industries Ltd, which is expected to occur next month.
Analysts predict that the recent tariff hike and revenue from the 5G business will increase Jio’s average revenue per user (ARPU), a crucial performance indicator for telecom companies, in the upcoming quarters, making it more appealing to potential investors before a share sale.

Reliance Jio IPO soon?

Reliance Jio IPO soon?

Mayuresh Joshi, head of equity research at the Indian unit of William O’ Neil & Co., said, “The stage is now set for the telecom market leader’s much awaited IPO in the near future.”
Jefferies, a brokerage firm, has said that it would be on the lookout for any updates on Jio’s listing at the upcoming RIL AGM, adding: “Rising focus on monetisation could be a precursor to its imminent listing.”
Based on the latest tariff hike and 5G monetisation efforts, Jefferies values Jio at approximately $133 billion (Rs 11.11 lakh-crore). At this valuation, Jio’s IPO could become India’s largest to date.
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Current regulations mandate companies with a valuation of Rs 1 lakh crore or higher to sell at least a 5% stake in the IPO (for smaller companies, the minimum is 10%), which implies that Jio’s share sale could be worth Rs 55,500 crore based on Jefferies’ current valuation.
Reliance Industries Limited, led by Mukesh Ambani, owns a 67.03% stake in Jio Platforms Ltd (JPL), which encompasses Reliance’s telecom and digital assets. The telecom business constitutes the majority of JPL’s operations. The remaining 32.97% is divided among strategic investors Meta and Google, holding 17.72%, and global PE investors, including Vista Equity Partners, KKR, PIF, Silver Lake, L Catterton, General Atlantic, and TPG, owning 15.25%. In 2020, JPL raised over Rs 1.52 lakh crore from these prominent global investors.
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Analysts suggest that the PE firms may consider exiting their investment through an IPO, as the typical holding period for PE investors is around four years.
Experts believe that Jio’s IPO could come with improving financials, supported by recent tariff hikes, with some anticipating another round of price increases next year. Jefferies projects Jio to achieve 18-26% compound annual growth in revenue and profit from FY24 to FY27.

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