Airtel Would Love the Jio IPO

Reliance Jio, the largest telecom operator in India, would be going for its initial public offering (IPO) in a matter of months. Reliance Industries Limited (RIL), the holding company of Reliance Jio, has already started the work on this. Airtel, the arch rival of Jio, would love for its competitor to be listed in the stock exchanges as well. For a decade now, Jio has been serving customers being a private entity. Once listed on the stock exchanges, the business outlook for the telco would shift naturally. While scale was the priority for Jio until now, that would change to profitability once listed.

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So why would Airtel enjoy looking at Jio making profits? You see, it is not at all about the profits. It is about the market dynamics. For Jio to for profits, it will have to indulge in tariff hikes. This is something Airtel wants should happen, but can’t move first with the tariffs as Jio’s lower pricing could result in customers leaving Airtel.

Airtel, further, would also enjoy a more premium outlook by the market as Jio would sit lower in certain business metrics such as average revenue per user (ARPU). The telecm sector weightage in the indices would also go up, making telecom a key contributor to the Indian economy. This will also help the telcos in getting more attention from the market.

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