Reliance Jio IPO likely to happen in 2025
Reliance Jio is expected to launch its initial public offering (IPO) in 2025. Analysts predict that the IPO would be launched after global private equity (PE) firms like KKR, PIF, Silver Lake, L Catterton, and TPG, which invested in Jio in 2020, may exit their investments. The telco is also expected to increase the prices of its plans by 20% after the general elections this year. The move will boost the company's revenue and valuation ahead of the IPO.
Reliance Jio's current valuation is at around $75 billion
Reliance Jio's current valuation is estimated at around $75 billion by American brokerage Jefferies. Jefferies projects a 25% growth in operating income (earnings before interest, tax, depreciation, and amortization or EBITDA) compounded annually over fiscal 2024-26 to $9.7 billion. This will happen only if there's a 20% tariff hike in Q2 FY25. Without the tariff hikes, Jefferies says Jio's EBITDA would be lower by 22% to $7.6 billion, which could significantly impact its valuation around listing.
Monetizing 5G investments and AirFiber services is Jio's priority
After rolling out its pan-India 5G network and acquiring 90 million 5G users, Jio now plans to monetize its 5G services. It is currently offering unlimited 5G internet for free. We expect the telco to launch its 5G plans later this year. Jio will also expand its enterprise offerings and JioAirFiber—a 5G-based fixed wireless access service. Analysts estimate that JioAirFiber services could generate $4-$9 billion in annual revenue if it reaches 50-100 million homes.
Jio's ARPU growth stagnant
Jio's Q3FY24 average revenue per user (ARPU) remained stagnant at Rs. 181.70 due to the higher proportion of JioBharat phone adoption (lower ARPU) and free 5G data cannibalizing 4G top-up data packs. To increase ARPU in the coming quarters, analysts suggest Jio should quickly hike overall tariffs, withdraw its unlimited 5G data plans, and price 5G services above 4G rates.
Who owns stakes in Reliance Jio?
Mukesh Ambani-led Reliance Industries has a 67% stake in Jio Platforms Ltd (JPL), which controls Reliance's telecom and digital assets. Out of the remaining 33%, a share of 18% is held by Meta and Google, while PE investors collectively own the remaining 15%.
