- Jio only telecom operator to report profit March quarter.
- It has appointed three investment banks- Moelis, Citi and ICICI securities
Reliance Industries Ltd (RIL) is exploring an Initial Public Offering (IPO) for its Jio Infocomm unit in the second half of 2020 at the earliest, according to people associated with the matter.
However, the first preference would be having investors onboard for the two infrastructure investment trusts (InvITs), which owns the company’s tower and fiber assets.
Exploring IPO opportunities
Multiple meetings were held over last month or so among the company officials, bankers and consultants. This indicates that the IPO initiative has “picked up the pace”, as reported by an anonymous source to ET.
Another source stated that concerns were raised over Jio’s falling average revenue per user (ARPU), a key industry parameter. It has dropped 5th straight quarter to Rs. 126.2 in January-March period from Rs. 131.7 in the previous one.
Jio is the only telecom company to report profits in the March quarter, up to 65 percent from the year-earlier with a rise of 56 percent in revenue. The company reported a standalone profit of Rs. 840 crore for the March quarter. The telecom arm of RIL saw profit jump 64.7 percent as compared to Rs. 510 crore reported for the previous year. The net profit for the year 2018-19 was Rs. 2,964 crore. However, the sequential profit growth for the company fell to 1 percent as compared to 22 percent in the previous one.
A report said that RIL has made it clear that an IPO is only possible after the company’s recently demerged fiber and tower businesses- Jio Digital Fibre Pvt. Ltd. and Reliance Jip Infratel Pvt. Ltd. find investors.
It has appointed three investment banks- Moelis, Citi and ICICI securities, that have been appointed to reach out to potential investors for the InvIts may also work with IPO, said the people cited above.
Jio’s rise to prominence
Jio has got 306.72 million users for a 26.4 percent market share at the end of March in less than three years of operations. Crucially, Jio reported a 182 basis point sequential jump in revenue market share (RMS) to a 31.7 percent share, compared with Airtel 27.3 percent and market leader Vodafone Idea’s 32.2 percent, brokerage Emkay Global said in a report.
It faces the challenge of expanding its current 4G network and also buy the 5G spectrum and upgrade its infrastructure to the next generation of internet technology.
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