PE firms such as Vista Equity Partners, KKR, PIF, Silver Lake, L Catterton, General Atlantic and TPG had made investments in the domestic telecom operator in 2020.
Reliance Jio is likely to back the move for a minimum 20% tariff hike right after the national elections with an eye on the mega IPO, as a failure to do so could impact its valuation, the analysts said. American brokerage Jefferies pegs Jio’s current valuation around $75 billion.
Jefferies estimates Jio to deliver 25% growth in operating income (earnings before interest, tax, depreciation and amortisation) compounded annually over fiscal 2024-26 to $9.7 billion, but said this is contingent upon expectations of a 20% tariff hike in 2QFY25.
“Jio’s potential listing in 2025 is likely to make it more amenable to higher tariffs in 2024 to boost its growth, since in absence of tariff hikes, our FY26 forecast for Jio’s Ebitda would be lower by 22% to $7.6 billion, which could meaningfully impact its valuation around listing,” Jefferies said.
Mukesh Ambani-led Reliance Industries holds a 67% stake in Jio Platforms Ltd (JPL), which houses Reliance’s telecom and digital properties. Out of the balance 33%, 18% is held by strategic investors Meta and Google, while PE investors collectively own the remaining around 15%. JPL has already raised over ₹1.52 lakh crore from these marquee global investors.Reliance Jio, the largest telecom service provider in the country, makes up the bulk of JPL’s operations.Strong enthusiasm around a potential big-bang Reliance Jio IPO next year comes at a time when the telco has concluded its pan-India 5G rollout, acquired 90 million 5G users and is likely to increasingly focus on monetisation of its 5G services by driving adoption and scaling up its enterprise offerings as well as Jio AirFiber – its 5G-based fixed wireless access (FWA) service.
“We expect Jio to now focus on looking to monetise these 5G investments … we expect the company to be aggressive in JioAirFiber additions, targeting the high-end/post-paid users, especially of Vodafone Idea which doesn’t have 5G, and also cater to 5G SA (standalone access) applications like private networks, IoT amongst others,” BofA Securities said in a note.
Analysts estimate Jio’s AirFiber services to potentially create a $4-9 billion annual revenue opportunity if it sees wide acceptance of 50-100 million homes amid efforts to create a replacement offering versus the PayTV market. They believe Jio is trying to pitch its AirFiber service as a replacement to the PayTV market, evident from the fact that TV channels are bundled with its 5G-based FWA service.
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