Reliance Jio IPO: RIL may delay tariff hikes as Airtel gains ground; check price targets

Domestic brokerage firm Motilal Oswal Financial Services (MOFSL) believes that Reliance Jio (RJio) may delay or resist tariff hikes, because higher tariffs may help Airtel gain revenue share faster- and possibly overtake Jio right before its IPO. Reliance Jio might resist or delay tariff hikes.

If tariff hikes are announced in December 2025, Bharti Airtel could significantly close the gap with RJio in terms of revenue market shares (RMS), potentially threatening to overtake RJio for the leading position by H1CY26, which is roughly similar to the RJio's IPO timeline, said MOSFL.

"Given this, RJio may not be comfortable with the second position on RMS heading into the IPO, which could delay the tariff hikes," it added. RMS is basically the share of total industry revenue that each telecom company earns. and it noted that Bharti Airtel has been the biggest beneficiary of past tariff hikes and has closed the gap in RMS with RJio by 190 bps since June 2024.

Motilal assumes a 15 per cent headline tariff hike from December 25 in its base case but it highlights India Government's potential relief package for Vodafone Idea (Vi) to ensure 3+1 market structure in the Indian telecom industry, aiming to maintain a competitive market and keep telecom services affordable.

The brokerage firm remains structurally positive on the telecom sector and continues to prefer Bharti Airtel, giving its a 'buy' rating with target price of Rs 2,365 and Reliance Industries, the parent company of RJio also gets a 'buy' with a target price of Rs 1,765 apiece.

"We continue to expect telcos’ FY25-28 ARPU to grow at 12 per cent CAGR given the consolidated industry structure, to ensure a ‘3+1’ player market and higher ARPU requirement for Jio not only to justify its significant 5G capex but also given its announced IPO plan for 1HCY26," said JM Financial.

Telcos could see 14-18 per cnet EBITDA CAGR over FY25-28 as JM expects 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. Potential repair of industry tariff structure to the ‘pay as you use’ model is likely to aid ARPU growth in the long term, it said.

With pan-India rollout of 5G already achieved, both Bharti and Jio’s capex has moderated in FY25 and guidance of FY26 capex is likely to be lower, it noted. "We estimate that Bharti’s India business FCF will rise to Rs 37,300 crore/ Rs 41,600 crore/ Rs 49,100 crore in FY26/FY27/FY28 and Jio’s FCF could rise to Rs 24,500 crore/ Rs 33,700 crore/ Rs 41,400 crore in FY26/FY27/FY28."

JM has suggested to buy Bharti Airtel (target price: Rs 2,460) and Bharti Hexacom (target price: Rs 2,195) , while it has a positive view on Reliance Jio. It believes that the valuation for the telecom major at current valuations (valuing Jio at $153 billion) are the same, implying an EV/Ebitda level of 12.4 times. It has an 'add' rating on Vodafone Idea with a revised target price of Rs 11.5.