A vendor uses a smartphone while standing next to advertising for Reliance Jio Infocomm Ltd. at the Nehru Place IT Market in New Delhi. (Photographer: Sanjit Das/Bloomberg)

Reliance Said to Mull Wireless IPO After $31 Billion Spree

(Bloomberg) -- India’s richest man is weighing an initial public offering of mobile operator Reliance Jio Infocomm Ltd., people with knowledge of the matter said, after a $31 billion investment spree that roiled the country’s wireless market.

Reliance Industries Ltd., the conglomerate backed by tycoon Mukesh Ambani, is holding internal discussions about preparing to list Jio as soon as late 2018 or early 2019, according to the people. Jio, which hasn’t made a profit since its official launch last year, is targeting to improve its financial performance before any share sale, the people said, asking not to be identified because the information is private. 

Reliance Said to Mull Wireless IPO After $31 Billion Spree

A Jio listing would cap a triumphant return to the Indian wireless market for Ambani, 60, more than a decade after a family feud that led him to cede control of a previous telecom venture to his younger brother. Jio, which is wholly owned by Reliance Industries, launched a free-for-life call service last year that triggered a price war and consolidation in one of the world’s most crowded mobile markets.

“It should get reflected in the current market price level for Reliance,” Deven Choksey, managing director of K.R. Choksey Shares & Securities Pvt, told Bloomberg Quint on Tuesday.

Jio may achieve a market capitalization of around 500 billion rupees ($7.8 billion) to 700 billion rupees through an IPO, according to Arun Kejriwal, founder of advisory firm Kejriwal Research & Investment Services Pvt. That valuation assumes the company will be able to reach annual revenue of about 250 billion rupees by the time it lists, Kejriwal said by phone Tuesday.

Ahead of Schedule

Bharti Airtel Ltd. this year agreed to absorb Tata Group’s mobile-phone business, while Vodafone Group Plc and Idea Cellular Ltd. announced they would merge their local operations to create the nation’s largest wireless operator. Despite being the newest entrant, Jio has accumulated more than 138.6 million subscribers, making it the fourth-largest operator at the end of September, according to data from the telecom regulator.

Deliberations about a Jio listing are at an early stage, and there’s no certainty they will lead to a transaction, the people said. A Reliance spokesman said on Tuesday the company does not “comment on media speculation and rumours.”

Click here to see how one family is roiling India’s phone industry.

Jio reported a net loss of 2.71 billion rupees ($42 million) in the quarter ended Sept. 30, though the business made a profit before interest and taxes over the period. The wireless operator is “ahead of our schedule in terms of the returns” generated, Ambani said at a Dec. 1 event in New Delhi. Jio is also planning further market share gains: the company is selling a $23 handset that offers 4G data plans that cost as low as 23 rupees for two days or 153 rupees monthly.

Reliance Said to Mull Wireless IPO After $31 Billion Spree

Ambani has a net worth of nearly $40 billion, according to the Bloomberg Billionaires Index. Shares of Reliance Industries, whose operations span refining to retail, have jumped 69 percent this year to give the company a market value of about $92 billion. India’s stock benchmark index, the S&P BSE Sensex, rose 25 percent over the same period.

The benchmark index in India is trading near an all-time high, which has helped fuel a record IPO haul in the country. First-time share sales in the country have raised 750 billion rupees ($11.6 billion) this year, more than double the previous record set in 2010, according to data compiled by Bloomberg.

Billionaire Sunil Mittal, who controls the country’s No. 1 wireless operator Bharti Airtel, warned last month the price war in the Indian market could continue through the first half of 2018. The Indian government is working on a new policy to encourage capital spending and restore the financial health of mobile-phone operators battered by bruising competition, telecom secretary Aruna Sundararajan said in a November interview.

©2017 Bloomberg L.P.