New Delhi, September 3
Reliance Jio's much-awaited IPO is poised to be a mega event in the telecom sector, financial services firm CLSA has asserted. With a strong subscriber base of over 500 million 4G/5G subscribers, Jio holds 42 per cent of the market share; it has a strong growth potential going ahead.
On August 29, Reliance Industries Chairman and Managing Director Mukesh Ambani announced that Jio will file for its much-awaited initial public offering (IPO), with plans to list by the first half of 2026. It would, however, be subject to necessary approvals, he said.
Against that backdrop, CLSA has put out an exhaustive report underlining Reliance Jio's achievements over the past decade.
The report outlined that Jio has reached USD 13 billion and USD 7 billion in revenue and Ebitda, CLSA said, adding that it had offered the sector-leading growth.
Jio's ARPU (average revenue per user) at Rs209 is up 63 per cent since it started tariff hikes yet is 17 per cent below Bharti Airtel, it noted.
"We expect Jio's rising ARPU will drive 50-60 per cent growth in revenue and Ebitda to USD 19-11 billion by FY28CL. Jio remains relentless in its investment with USD 51 billion capital employed, and its much-awaited IPO is set for 1H26. Jio is valued in Reliance's SOTP at USD 128 billion EV on 13x EV/Ebitda," the CLSA report read.
"The Jio IPO will be a mega event and a rerating trigger for Bharti, in our view. Jio and Bharti are two of the most direct ways to invest in India's digitalisation and offer a highly favourable risk-reward," it continued.
Jio's also garnered an all-India revenue market share of 42.3 per cent, the sector's highest, followed by Bharti at 39.2 per cent, underscoring its strength of network and execution, it added.
Jio is also leading in the residential business with 20 million subscribers on Jio Fiber and Jio AirFibre (5G FWA) and is targeting 100 million homes. Bharti has 11 million residential subs, according to the CLSA report.
Jio's discounted tariffs (still 14-22 per cent lower versus Bharti) have ramped up 4G/5G subs (5G at 42 per cent of total) even as Jio's 5G tariffs are at a 17 per cent premium to own 4G plans, it analysed.
In July 2024, Jio led sector tariff hikes and increased prepaid tariffs by 13-25 per cent and even hiked its entry post-paid plan by 17 per cent to Rs 349.
It also changed the threshold to avail 5G services from 1.5GB/day to 2GB/day at a cost of Rs 349, an increase of 46 per cent.
On the broader conglomerate Reliance Industries, CLSA noted that strong growth momentum in Jio led by tariff hikes, along with steady streamlining of retail operations -- allowing for a recovery in its growth momentum in the next few quarters -- will be drive a significant upside for the stock.
"Flow-through of recent tariff hike for Jio, recovery in retail's growth momentum and Jio Airfiber led positive momentum in broadband subscribers should drive improvements. Start of new energy projects and possible IPO of Jio are other triggers over next 12-15 months," it supplemented.
- ANI
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