Is India’s Jio heading for an IPO?

• Jio is India’s largest mobile operator and it is growing its customer base, sales and profits
• It has also just hiked up its tariffs
• All of this is suggesting to financial analysts that an IPO plan might be in the offing

Financial analysts in India believe that the recent announcement of tariff increases by Reliance Jio signal that it is likely the country’s mobile market leader is being prepared for an IPO, according to local reports. 

The financial community in India has long expected that Jio’s parent company, Reliance Industries Ltd (RIL), the giant conglomerate that is run by Mukesh Ambani, would look to offer up Jio shares to the public markets. An article published by The Economic Times (and republished here by Microsoft Start) notes that analysts expect some kind of announcement during RIL’s annual general meeting, which is set to take place in August (though no exact date has been set). 

The analysts believe that the tariff increases – which were mirrored by Jio’s main domestic telco rival Bharti Airtel – point to a greater focus on the monetisation of Jio’s mobile subscriber base and a very clear effort to improve the monthly average revenue per user (ARPU) level, which during the fourth quarter of the most recent full financial year that ended in March 2024 stood at 181.7 rupees ($2.18). When the tariff increases were announced, Bharti Airtel noted that monthly ARPU levels needed to be at least 300 rupees in order for India’s major telcos to be able to invest properly to support customers and make a profit. As Jio’s price increases range from 12% to 27%, depending on the service package, it’s clear that while the ARPU levels will now rise (the increases came into effect on 3 July), they are not going to rise too much above 200 rupees in the near term. 

But these are the kinds of moves that signal other activities and plans, it seems.    Investment advisory firm Jefferies will be keeping an eye out for IPO hints or announcements during the upcoming AGM as it believes the “rising focus on monetisation could be a precursor to its imminent listing,” according to The Economic Times report, which added that the Jefferies team believes Jio is valued at about $133bn. 

Jio certainly has the scale that investors like and it is still growing. At the end of April, Jio had just over 472.4 million mobile subscribers, giving it a market share of 40.48%. More than 108 million of those mobile customers have signed up for the operator’s 5G services, which are now available nationwide following a massive $25bn capital investment programme and now, understandably, RIL wants a return on its investments.    

If an IPO is set in motion, though, it would be for shares in Jio Platforms, a subsidiary of RIL that comprises multiple digital platforms and assets, the largest of which by far is Reliance Jio Infocomm Ltd (the full and proper name for the mobile network operator). 

RIL currently holds a 67% stake in Jio Platforms: The remaining third was sold off to various big tech and private equity firms in 2020, with Meta (at the time still called Facebook) taking a near 10% stake and Google snapping up a 7.73% stake. The private equity firms with a holding in Jio Platforms include Silver Lake, Vista Equity Partners, Mubadala Investment Co, Abu Dhabi Investment Authority, KKR and TPG.

In the financial year that ended in March, Jio Platforms reported revenues of 1,285bn rupees ($15.4bn), up by 11.7%, EBITDA of almost 550bn rupees ($6.6bn), up by 12.8%, and net profit after tax of 214.2bn ($2.56bn), up 12%. Those are attractive numbers. 

And Jio Platforms isn’t limiting itself to the market in India. It has been developing its own products and technology (hardware and software) for use by Jio and its customers and is keen to sell those internationally. Just recently, one of Jio Platforms’ technology units, Radisys, was announced as a vendor partner for a 5G rollout in Ghana, while Jio Platforms was once again much in evidence at the recent DTW24 Ignite event in Copenhagen, where it was showing off a broad range of OSS, BSS, mobile core platform and AI products, including Jio Brain, the AI platform it unveiled in January this year – see Jio Platforms unveils its ‘JioBrain’ AI platform.

There’s even industry gossip that Jio Platforms might fancy owning and running mobile networks outside of India. 

All of this points to a broader market focus for Jio Platforms and an IPO might just give it the additional boost it needs to execute its growth strategy. Keep an eye out for that RIL AGM and for a bigger international presence for Jio Platforms in the coming years. 

- Ray Le Maistre, Editorial Director, TelecomTV