Jio listing: Tariffhikes a trigger, but spinoff better option

A Jefferies report suggesting the possibility of a spinoff, or an IPO of Reliance Jio Infocomm (Jio) has trained the spotlight on the telecom and digital space.

- DEVANGSHU DATTA

The global brokerage assesses a likely valuation of around $112 billion for a listing.

One of the triggers for the report is that telecom service providers have started to hike tariffs as was widely expected and this could push up average revenue per user (Arpu) for market-leader, Jio and its rivals, Bharti Airtel and Vodafone Idea.

If at all Jio is listed in calendar year 2025, RIL could go about it in several ways. It could look at a spinoff as it did with Jio Financial Services (JFS) where it offered RIL shareholders, commensurate holding in JFS.

In that case, RIL owner's stake dropped from 100 per cent to 45.8 per cent. Alternatively, RIL could go for an IPO for Jio. Given IPO requirements, RIL would have to sell 10 per cent of Jio equity, retaining a stake of around 56 per cent in the newly-listed entity assuming existing institutional investors do not offload any stake.