Reliance Jio IPO: How JM Financial Sees the Future of Indian Telecom Sector

Jio IPO and Tariff Hikes
According to JM Financial, Jio’s IPO will play a pivotal role in reshaping market dynamics. The firm expects a significant tariff hike of nearly 15% around November–December 2025, followed by regular increases. These hikes are essential for Jio to justify its substantial 5G investments and align with the government’s vision of maintaining a '3+1' player market structure, ensuring fair competition and long-term sustainability.

Bharti Airtel’s Strong Outlook
Bharti Airtel is expected to benefit considerably from these developments. JM Financial projects a 13% CAGR in industry ARPU over the next three to five years, supported by premiumisation and tariff increases. Airtel’s India wireless ARPU is projected to cross Rs 310 by FY28, driving a consolidated EBITDA CAGR of around 16% between FY25 and FY28. Strong free cash flow generation is expected to help Airtel achieve a net cash position by FY30.

Structural Shift in the Industry
The telecom industry is gradually moving towards a 'pay as you use' model, where heavy data consumers will contribute more to revenue growth. This shift is seen as a cornerstone for long-term profitability, allowing telecom operators to monetise increasing data demand effectively.

Jio’s Market Dominance in 5G
Reliance Jio continues to lead the 5G fixed wireless access (FWA) market with a commanding 78% share. Its aggressive rollout of JioAirFiber has boosted home broadband subscriptions, placing it ahead of competitors. While Airtel is also expanding its presence, Jio remains the dominant player in this segment.

Impact on Competitors and Investment Calls
JM Financial believes Jio’s IPO and subsequent tariff hikes will also support the viability of Vodafone Idea, helping maintain competitive balance. However, Vodafone Idea still faces significant challenges, leading to JM assigning a 'HOLD' rating with a target price of Rs 9.

Meanwhile, Indus Tower has been given a 'HOLD' rating with a target price of Rs 340, due to risks of a potential duopoly. On the other hand, Tata Communications has received a 'BUY' rating with a target price of Rs 2,000, owing to strong growth prospects in its digital portfolio.

For Bharti Airtel, JM Financial maintains a 'BUY' rating with a target price of Rs 2,240, while Reliance Industries, Jio’s parent company, has been given a 'BUY' rating with a target price of Rs 1,700.

5G Monetisation Potential
The report highlights that both Bharti and Jio have already achieved 42% 5G subscriber penetration, underscoring significant opportunities for 5G monetisation. With continued network expansion and customer-centric plans, both companies are poised to capture further market share.

Conclusion
The upcoming Reliance Jio IPO is set to redefine the Indian telecom industry. With strategic tariff hikes, robust 5G expansion, and increased premiumisation, the sector is moving towards stronger profitability and innovation. Bharti Airtel and Reliance Jio stand out as the biggest beneficiaries, while Vodafone Idea’s future remains uncertain. For investors, this transformation offers both opportunities and challenges, making it a sector to watch closely in the coming years.