Tariff hikes the key to Reliance Jio's IPO dream

Tariff hikes were a lifeline for telcos Airtel and Vodafone Idea. For Mukesh Ambani-owned Jio, though, it’s a ticket to a successful public listing

After years of a bruising tariff war, India's private telcos recently announced they would all be hiking tariffs

The proposed hikes will increase the industry’s annual revenue and EBITDA by Rs 53,000 crore and Rs 42,000 crore, respectively

While it's good news for VIL and Airtel, it takes Reliance Jio a step closer to an initial public offering

Beside assuring a positive cash flow, tariff hikes over the next few years would give Jio a return on capital of 12%

As recently as a month ago, the future of two of India’s three remaining private telecom players—Vodafone Idea Limited (VIL) and Bharti Airtel—was in doubt. Slapped with retrospective payments of Rs 53,000 crore (~$7.3 billion) and Rs 35,500 crore (~$4.8 billion), respectively, by the Supreme Court—in line with a broader definition of what constituted taxable revenues—VIL and Airtel were living on borrowed time. The only winner in all of this was Reliance Jio, which is owned by the richest man in Asia, Mukesh Ambani.

Unlike its competitors, Jio was hit with a much smaller payment.

AUTHOR

Pratap Vikram Singh

Pratap is based out of Delhi and covers policy and myriad intersections with the other sectors, most notably technology. He has worked with Governance Now for seven years, reporting on technology, telecom policy, and the social sector.

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