Analysts expect Mukesh Ambani’s telecom giant to raise over Rs 55,000 crore and achieve $133 billion valuation

Introduction:

Reliance Jio Infocomm, the telecom arm of Mukesh Ambani’s Reliance Industries, appears to be laying the groundwork for a highly-anticipated initial public offering (IPO). Recent strategic moves like hiking tariffs and monetizing its 5G rollout have analysts speculating that India’s largest telecom operator is gearing up to make a blockbuster debut on the stock market, possibly as early as next year. The Jio IPO is expected to emerge as India’s biggest ever, potentially raising over Rs 55,000 crore for the company.

Brokerage firm Jefferies believes Jio’s “rising focus on monetisation could be a precursor to its imminent listing.” Based on the company’s recent actions, Jefferies pegs Jio’s current valuation at a staggering $133 billion (Rs 11.11 lakh crore). If Jio goes ahead with an IPO at this valuation, it would need to sell just a 5% stake to raise Rs 55,500 crore as per current regulations, far surpassing the record Rs 21,000 crore IPO by state-run Life Insurance Corporation (LIC) in 2022.

Over the past month, Jio has raised tariffs on its prepaid plans by 12-25%, closely followed by competitors Airtel and Vodafone Idea who also hiked rates. This came on the heels of Jio moving its unlimited 5G data benefit to higher-priced premium plans. Analysts like Jefferies’ Joshi see these moves as being aimed at boosting Jio’s average revenue per user (ARPU) and overall financials ahead of a potential listing. The tariff hikes were seen as necessary given Jio’s massive $25 billion investment in 5G spectrum and nationwide network rollout.

“Jio’s IPO has been highly awaited for years, and it now looks closer than ever,” said telecom industry veteran Ajay Sharma. “The recent monetization steps will significantly strengthen the company’s balance sheet and make it very attractive for investors. I wouldn’t be surprised to see Jio pulling off a $30-40 billion IPO within the next 12-18 months.”

Reliance Industries Ltd (RIL) currently owns a 67% stake in Jio Platforms Ltd, which houses Jio along with other digital properties. Global tech giants like Google and Meta own 17.7% of Jio Platforms, while an array of marquee private equity investors including KKR, Silver Lake, and General Atlantic own the remaining 15%. This heavyweight investor backing is expected to further boost interest and valuations when Jio hits the public markets.

For the Indian startup ecosystem, a successful mega-IPO by Jio could open the floodgates for other major players who have been contemplating listings. It may prompt a rush of IPOs from mature, well-funded startups across sectors like e-commerce, fintech, SaaS and more. “If Jio can blaze a trail and show how a tech startup can deliver a fantastic outcome for public market investors, that will lend a lot of confidence to the entire Indian startup space,” noted startup mentor Karan Mehra.

Conclusion:

As Reliance Industries’ upcoming AGM approaches, all eyes are on Mukesh Ambani to see if he finally announces concrete plans for Jio’s much-awaited public listing. By all indications, Jio seems to be taking big steps to shore up its financials and achieve a stellar valuation before taking the IPO plunge. If and when that does happen, Jio’s IPO will be a pivotal event for both India’s telecom sector and technology startup ecosystem. It has the potential to re-energize India’s somewhat lackluster IPO market and unleash a new wave of mega startup listings over the next few years.