Reliance Industries Ltd (RIL) is browsing an initial public offering (IPO) for its Reliance Jio Infocomm unit in the latter half of 2020 at the earliest. The first priority would be getting investors for the two infrastructure investment trusts (InvITs), which own the company’s tower and fibre assets.
Multiple meetings have taken place over the last month or so among company executives, bankers and consultants, indicating that the IPO initiative has “picked up the pace.”
The company was the only telco to post profits in the March quarter, up 65 per cent from the year earlier on a 56 per cent rise in revenue. But sequential profit growth was 1 per cent against 22 per cent in the preceding quarter, constrained by the ARPU fall and higher network and depreciation and amortisation expenses.
The telco started its commercial operations in September 2016 but reported its first numbers at the end of March 2017.
The operator’s ARPU dropped for the fifth straight quarter to Rs 126.2 in the January-March period from Rs 131.7 in the preceding one. In comparison, those of rival Bharti Airtel and Vodafone Idea, though lower than Jio’s, have improved sequentially, signalling that customers remaining with the two larger telcos subscribe to higher tariff plans.
RIL is said to have made clear in the discussions that an IPO will take place only after the company sees its recently demerged fibre and tower businesses — Jio Digital Fibre Pvt Ltd and Reliance Jio Infratel Pvt Ltd respectively – get monetised via investors in the two InvITs.ET reported earlier this month that Brookfield Asset Management is close to investing in the portfolio of 170,000 towers currently valued at around Rs 36,000 crore. After the demerger of its tower and fibre operations and transferring of debt to the tune of Rs 1.07 lakh crore to the two units, Jio’s net debt stood at Rs 67,000 crore at March end.
In less than three years of operation, Jio has got 306.72 million users for a 26.4 per cent market share at the end of March. Crucially, in that quarter, Jio reported a 182 basis point sequential jump in revenue market share (RMS) to a 31.7 per cent share, compared with Airtel’s 27.3 per cent and market leader Vodafone Idea’s 32.2 per cent, brokerage Emkay Global said in a report. A basis point is 0.01 percentage point.
