Mukesh Ambani led Reliance Jio has already spent $31 billion and has never booked any profit. Despite these facts, reports are emerging that they may soon launch an IPO and list themselves in the stock markets.
As per reports, Jio is planning to launch their debut listing by end of 2018, or early 2019, and groundwork has already started.
We analyse the market scenario, and present before you 3 reasons why it makes perfect sense.
Reason #1: Telecom Market Is Now Consolidated
Within a year of their launch, Jio has literally disrupted entire telecom market, and the result of Jio’s tsunami is that, there exists only three major telecom companies right now: Airtel; Vodafone-Idea and Jio.
While Tata Teleservices would be merged with Airtel, BSNL and MTNL’s subscriber base is shrinking, rather than growing.
This leaves Jio as the third major player in the market, and an IPO next year can have very excellent results.
This was echoed by Sanjiv Bhasin, EVP-Markets & Corp Affairs, India Infoline as he said,
“Since now we have just three players — Idea-Vodafone, the Bharti Airtel and Jio — it would be a very-very well received paper. Given the wall of liquidity, a good paper will always find a lot of people who will benefit from it,”
Right now, Jio has presence across 29 states, as it is available across 18000 urban locations and 2 lakh villages.
Consolidation in the telecom market will prove as a major advantage for Jio, and it seems they are ready to cash in this factor.
Reason #2: Jio Is World’s Fastest Growing Tech Company
After their official launch in September last year, Jio is already India’s 4th largest telecom player by subscribers count, and if we combine Vodafone and Idea, then 3rd largest telco.
At the end of September 2017, they have 13 crore+ subscribers, and they are right now India’s fastest growing technology company.
Investing at a telco which is growing by shattering all records seems logical, and their IPO is expected to well received from the veterans of stock market, as Reliance has a solid name and presence in the markets. Combined this with the label of ‘fastest growing technology company’ makes it a killer deal.
In the first 170 days of their launch, they garnered 100 million customers, with new addition of 6 lakh customers a day – a feat rarely witnessed anywhere in the World.
But, the only limiting factor here seems Jio’s financial position right now. Till date, they have invested close to $31 billion in setting up infrastructure and logistics and networks, besides launching subsidized, almost free 4G handsets.
For the quarter ending September 30th, 2017, Jio had reported revenues of 6,147 crore, and loss of Rs 279.59 crore. In their statement, Jio has said that they had positive earnings before interest and tax, due to strong user additions and cost efficiencies.
As per insider sources, Jio will move cautiously, and before filing their IPO, they would want to have a positive financial report, a factor which is very crucial for investments.
Reason #3: Data Is The New Oil; And Jio Will Become The Bottomless Oil Well
And lastly, it is all about data. Reliance Industries, traditionally, has made fortune via their shares, and their claims about exploring oil and gas.
And Mukesh Ambani has recently said that Data is the new Oil, and this clearly showcases their ambitions. Reliance is aware that in coming years, the strength of a company would be gauged by the amount of data it controls, and by that means, Jio is all set to become a bottomless well, brimming with insane amount of data.
And the process has already started. Using the data which Jio has, they have launched smart car devices, beaten Netflix and Amazon Prime in entertainment niche, and planning collaborations and partnerships to gain more mind-share among mobile users.
Besides, in order to access that data, and to connect it with Internet, they have already launched World’s longest 100Gbps Submarine Cable System measuring 25,000 Kms.
In short, they are doing everything possible to gain control over the new oil, which is data, and investors are already impressed.
Now, the question which arises: Can Jio disrupt the stock market, the way it has disrupted Indian telecom industry? Will small scale investors trust Mukesh Ambani?
Jio hasn’t confirmed their IPO news, and have issued a statement to ET:
“With reference to your query regarding a media article published today on Jio’s IPO plans, we would like to state that the said article is speculative, and as a policy we do not comment on media speculation and rumours,”
We will keep you updated as receive more news on this topic.