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Reliance Jio’s planned initial public offering (IPO) in the first half of calendar 2026 (H1CY26) is emerging as a key trigger for the next round of tariff hikes in India’s telecom sector and a fresh rerating of the company’s valuation, according to a new sector report by JM Financial Institutional Securities.
The brokerage values Jio at about $140 billion in equity ($153 billion enterprise value) and argues that the IPO will reinforce the “free cash flow growth story” for both Jio and Bharti Airtel over FY25–28, driven by higher tariffs and rising premiumisation.
IPO timeline raises odds of 15% tariff hike
JM Financial believes Jio’s stated plan to list by H1CY26, as announced at Reliance Industries’ annual general meeting (AGM), has materially improved the visibility of a fresh 15 per cent tariff hike in the coming months.
The last industry-wide increase came in July 2024, and Jio – historically a reluctant follower – led that round. Jio also affirmed this by leading the industry to discontinue the entry-level 1 GB per day plan (from online channels).
This, combined with the government’s publicly stated desire to maintain a “3+1” player market and ensure Vodafone Idea’s viability, strengthens the case for more regular tariff hikes over the next few years, the analysts argue.
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Jio valued on par with Bharti, but room for a premium
At its $15,300 billion enterprise value for Jio, JM Financial’s model implies around 12.4x FY28 enterprise value to Earnings before interest, tax, depreciation and amortisation (EV/Ebitda) for the telecom business – almost identical to the 12.4x it ascribes to Bharti’s India business (valued at about $150 billion EV).
The report highlights several factors that could allow Jio to command a valuation premium post-IPO:
Faster home broadband growth: Jio is adding roughly 0.9 million home broadband subscribers per month, about 3x Bharti, supported by dominant 75 per cent share in 5G fixed wireless access (FWA), and in-house unlicensed band radio (UBR) technology enabling rapid, cost-efficient rollout.
Stronger earnings growth potential: Jio’s tariffs are still 5–10 per cent lower than Bharti’s despite a stronger network; over time, these could converge upward. Aggressive subscriber acquisition strategy supports sustained volume growth.
Lower incremental capex intensity: As Jio already runs a 5G standalone (SA) network, its future 5G capex per unit of revenue could stay below Bharti’s, which still has to fully transition to SA.
Option value in digital assets: Jio has invested roughly $10 billion into its broader digital ecosystem, which the market currently values at just 1–1.5x invested capital. Any outperformance here could support a higher multiple. At the same time, JM Financial notes that Bharti’s India business could still trade at a premium to Jio on metrics like higher ARPU and returns on capital. Bharti’s India wireless ARPU stood at ₹256 in Q2FY26, as against Jio’s ₹211, including home broadband and M2M, and Bharti’s post-tax return on capital employed (RoCE) is estimated to be about 2 percentage points higher than Jio’s.
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Free cash flow set to surge as 5G capex normalises
With pan-India 5G rollout largely complete, both Jio and Bharti are moving past their capex peak. JM Financial expects:
Jio’s annual capex is expected at ₹39,600–43,300 crore in FY26–28, down from a peak ₹48,900 crore in FY24. Its free cash flow (FCF) is likely to rise from ₹24,700 crore in FY25 to ₹24,500 crore in FY26, ₹33,700 crore in FY27, and ₹41,400 crore in FY28, putting the company on track for a net cash position by FY31.
For Bharti’s India business, the brokerage estimates FCF will climb from ₹31,600 crore in FY25 to ₹49,100 crore in FY28, with a possible net cash position by FY30, enabling higher dividend payouts.
These improving cash flows are central to the Jio IPO narrative: a listed entity with visible FCF growth, moderating capex, and structural ARPU tailwinds is likely to appeal to both domestic and global institutional investors, according to analysts.
Industry outlook
JM Financial estimates that, for the sector will earn a 12–15 per cent pre-tax RoCE after heavy 5G investments, industry average revenue per user (ARPU) needs to rise to ₹270–300 by FY28, implying roughly 12 per cent CAGR from FY25 levels.
“Telcos could see 14-18 per cent Ebitda CAGR over FY25-28 as we expect 12 per cent ARPU CAGR led by: 6-7 per cent CAGR due to a tariff hike; and 5-6 per cent CAGR due to multiple premiumisation strategies; further, potential repair of industry tariff structure to ‘pay as you use’ model is likely to aid ARPU growth in the long term,” the report read.
Despite multiple tariff rounds since 2019, India’s ARPU remains about $2.4 per month, among the lowest globally and far below the $8–10 world average. Data prices are also at the bottom of the global league tables, even as monthly data usage per user has surged to 32GB, the highest in the world.
JM Financial's take on telecom stocks
JM Financial has retained a positive view on Jio and sees the impending IPO as a key inflection point for India’s telecom sector as it is expected to lock in a new, higher tariff regime, showcase a large-scale FCF-generating digital infrastructure play, and potentially reset valuation benchmarks for the entire sector.
JM Financial rating and target on telecom stocks:
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