Reliance Industries’ intention to list its digital services arm Jio Platforms (JPL) in the first half of 2026 accelerates the possibility of another round of tariff hikes by the end of 2025, analysts said.
IPO-driven strategy
The company, which houses the conglomerate’s telecom business under Jio Infocomm, will reportedly look to raise around Rs 50,000 crore through its initial public offering.
“As it gears up for the IPO, Jio will look to lift its Arpu (average revenue per user) and revenue metrics, which means the possibility of a tariff hike in November-December this year is high,” an analyst with a leading brokerage said.
Of the past three tariff hikes taken by private Indian telcos, two have come at the end of the festive season – in November or December, while the latest one in 2024 was affected in July.
Another analyst pointed out, Jio would want to show RoCE in the range of 12%-13%. “It currently clocks in the high single digits so a tariff hike could help push it up to the early teens which would be ideal in the run up to an IPO,” the analyst noted.
The timing of the next tariff hike has been a key focus area for analysts since the impact of the July 2024 hike is now behind the industry, with the last of the tailwinds felt in Q1 Arpu growth.
While neither RIL chairman Mukesh Ambani nor Reliance Jio Infocomm chairman Akash Ambani gave any indication on the amount the company intends to raise through listing, or the valuation at which it will go public, analysts peg Jio’s valuation at between Rs 10-12 lakh crore.
Broader Digital Play
UBS Research in a recent report has indicated that Jio’s performance metrics as of Q1FY26 put it in a good place to launch an IPO.
“With large investments in 5G and fibre completed, we expect capex to decline to Rs 35, 000-40, 000 crore annually in the coming years, resulting in strong improvement in free cash flows. This sets the stage for a value-realisation in the form of an IPO,” analysts from UBS noted in the report released this week.
BofA in its report highlighted that RIL’s digital business, which so far contributed 10% of JPL’s revenue (the remaining 90% comes from Jio Infocomm), is at an inflexion point and poised for growth by leverage new age technologies.
“We expect this business traction to be strong, given management focus to scale-up this business. The key contributors include cloud, content, enterprise and tech services,” BofA analysts said.
As per management commentary at the RIL annual general meeting on Friday, Jio’s AI Cloud offering is used by 40 million customers now. The company revealed plans to scale up the offering, positioning it as “more than just storage, but an AI-powered memory companion”.
RIL is tapping into new age businesses, like bundled connectivity, security, and Wi-Fi stack, analysts said adding that it is also growing as an end-to-end managed services partner of enterprises offering.
“It has been able to increase its wallet share with a lot of large enterprises, especially in the BFSI and the industrial segments, is seeing strong momentum in its IoT portfolio and has also won some good competitive tenders for government clients,” BofA analysts noted.