India's Jio IPO likely in 2025 – reports

India's largest service provider, Reliance Jio, is likely to come up with an initial public offering (IPO) next year, according to media reports.

It is likely that several private equity firms, including Vista Equity, KKR, Silver Lake and General Atlantic, will either exit or reduce their stake in 2025 after five years of investment in the service provider. This will clear the grounds for IPO in the coming year.

Reliance Industries holds a 67% stake in Jio Platforms, the holding company that owns Reliance Jio, while 18% is owned by tech giants Meta and Google and the remaining 15% by private equity investors. Jio Platforms has raised INR1.5 trillion (US$18.34 billion) from global investors.

Jio, along with other telcos, is likely to hike tariffs later this year after the general elections. Jio and Bharti Airtel are also likely to start monetizing 5G post-elections. As of now, Jio is offering unlimited 5G services for free despite saying it has completed pan-India coverage and has around 90 million subscribers. 

Growing ARPU

Together, tariff hikes and the introduction of 5G tariffs will help improve the average revenue per user (ARPU) for Jio, which will consequently boost its market valuation before its IPO next year. As per Jio's December 2023 quarterly results, the service provider has an ARPU of INR181.70 ($2.1), much lower than Bharti Airtel, which boasts an ARPU of INR203 ($2.4) per month.

According to brokerage firm Jefferies, Jio Platforms is valued at $75 billion and this will go up significantly after the much anticipated tariff hike later this year. 

Since Reliance Industries is the largest Indian conglomerate, IPOs of its companies typically garner heightened interest from the market. Jio's IPO is all the more anticipated since it is the country’s largest service provider, with over 400 million subscribers. There is also an interest in Jio's IPO because it plans to sell 5G solutions and products in the global telecoms market. In addition, it is developing capabilities in emerging technologies like AI.

The launch of Jio's IPO will be beneficial for Bharti Airtel, India's second-largest service provider. Brokerage firm CLSA said recently that Jio's listing on the stock exchange may lead to an increase in valuation and rerating for Bharti Airtel as well.