Reliance Jio has possibly been the biggest news maker of the year. After disrupting the telecom sector with its incredibly low-priced offerings, and notching up over 138 million customers in less than two years, Jio might already be looking at an IPO. According to Bloomberg, Reliance Industries is considering taking Jio public in late 2018 after having invested $31 billion in the unit. RIL is said to be holding internal discussions for the same, and Jio is aiming at a better financial performance before any share sale takes place. Also Read - Reliance JioFiber free 30-day trial plans: Rs 1,000 installation charges will be non-refundableAlso Read - New JioPhone 2021 offer: Reliance Jio offers JioPhone, unlimited voice calls and data for 2 years at Rs 1,999
Reliance, however, has been quick to deny speculations. It reportedly said that Jio-parent RIL has enough cash to repay debts and fund future expansion. “We would like to state that the said article is speculative and as a policy, we do not comment on media speculation and rumors,” an RIL spokesperson said in a statement. However, market experts reckon that an IPO would enable Jio to gain a market cap of $7.8 billion. But that valuation would depend on its sales performance over the next year. Also Read - Qualcomm a key player in upcoming Reliance Jio-Google's low-cost Android smartphone
For the September quarter, Jio incurred losses of Rs 270.59 crore on sales of Rs 6,147 crore. However, the telco said that it is breaking even at a pre-tax level. Strong user additions and increased tariffs have fueled the growth. By next year, Jio is expected to own one-fifth of the domestic telecom market. “It [IPO] seems a little early to me, but again telecom is a business where things can move pretty fast. By mid next year or end of next year they will close with a subscriber base market share of 20 percent. At that time they would be in a decent position to start looking at monetizing that,” an analyst was quoted as saying.
While an IPO is a natural progression, India’s regulatory body SEBI mandates all firms to clock at least Rs 15 crore in pre-tax profits for least three years before they can make a public offering. SEBI can make its rules flexible if three-fourths of the shares issued go to institutional investors. But there is no clarity on that front, even though Ambani had earlier hinted that Jio would break-even earlier than expected. “I don t want to predict, but I think we are ahead of our schedule in terms of the returns that we are generating,” he had said.