Jio IPO timing vs tariff hikes: RMS risk and strategy

Reliance Jio’s path to a mid-2026 IPO is increasingly intertwined with the timing and magnitude of India’s next mobile tariff hike.

Why Jio may delay tariff hikes to defend RMS pre-IPO

Domestic brokers argue Jio has a tactical reason to push back on near-term tariff increases: hikes tend to accelerate Bharti Airtel’s revenue market share (RMS) gains more than Jio’s, narrowing the lead at the worst possible time for an IPO. In a scenario where the industry lifts prices around December 2025, analysts see Airtel closing the RMS gap swiftly and potentially challenging Jio’s top spot by the first half of calendar 2026. That optics risk—heading into listing with a No. 2 RMS position—creates a rational incentive for Jio to delay or resist hikes until it locks in more resilient leadership metrics. RMS, a proxy for share of industry revenue, is arguably the KPI investors will scrutinize most as it reflects both pricing power and mix.

Airtel’s RMS gains from ARPU hikes: implications for Jio

Airtel has been the key beneficiary of previous price actions, chipping away at Jio’s RMS advantage by almost two percentage points since mid-2024. The mechanism is straightforward. Price-led ARPU expansion amplifies Airtel’s premium mix (postpaid, higher-data cohorts, converged bundles) faster than the industry average, while Jio captures scale but sees less uplift per subscriber at the high end. If the sector pivots to steeper headline hikes, Airtel’s revenue share could advance faster than subscriber share suggests, raising strategic pressure on Jio’s IPO narrative.

India telecom outlook: ARPU, EBITDA, 5G capex, FCF

Brokerage forecasts point to a healthier earnings cycle ahead, driven by ARPU growth, premiumisation, and lower 5G capex intensity.

ARPU drivers and tariff model reset toward pay-as-you-use

Consensus expects ARPU to compound around low double digits through FY28. Roughly half of that uplift is modeled to come from structural tariff changes and half from premiumisation—migration to higher-value plans, device-led upsell, family bundles, and enterprise mobility. A gradual repair of the tariff framework back toward “pay as you use” (clear data allowances, fewer hidden subsidies, less unlimited leakage) could make ARPU gains more durable. For Jio, higher ARPU is essential to underwrite 5G investments and support IPO valuation; for Airtel, it cements RMS gains and return on capital discipline.

5G capex taper and monetisation focus: FWA, densification, MEC

With pan-India 5G coverage largely complete, both Airtel and Jio have pivoted from build to monetize. Capex moderated in FY25 and guidance points lower for FY26 as radio rollout crests and the focus shifts to utilization: FWA penetration, high-capacity urban densification, and core upgrades for latency-sensitive use cases. The monetisation catch-up—network slicing pilots, enterprise private 5G, MEC adjacency services—will matter more than greenfield coverage from here.

FCF outlook by operator: Airtel vs Jio through FY28

Modelled free cash flow (FCF) improves materially as capex eases and ARPU rises. Airtel’s India FCF is projected to step up from roughly Rs 37,300 crore in FY26 to about Rs 49,100 crore by FY28. Jio’s FCF is seen rising from about Rs 24,500 crore to Rs 41,400 crore over the same period. Those trajectories support balance-sheet repair, spectrum liabilities, and selective growth bets in digital and enterprise. At the sector level, EBITDA is forecast to compound in the mid-teens through FY28, reflecting combined tariff and mix effects.

Competitive landscape and policy: 3+1 market dynamics

The regulator and policymakers remain oriented toward a pragmatic “3+1” market, keeping competition intact while preserving investment incentives.

3+1 market model and Vodafone Idea stabilization

Expect the government to continue nudging toward a three-private-plus-BSNL structure to avoid excessive concentration and protect affordability. Any relief that stabilizes Vodafone Idea’s liquidity and capex runway reduces systemic risk and gives the industry room to raise tariffs without triggering share shocks. For operators, the implication is clear: price repair will likely be paced and coordinated by market conditions and policy optics, not just by balance-sheet needs.

Jio IPO valuation markers and investor positioning

Valuation markers are crystallizing ahead of Jio’s listing. On current assumptions, Jio is informally pegged around $153 billion, implying an EV/EBITDA multiple near the low teens—credible if ARPU and FCF trajectories land as modeled. Airtel continues to screen as a quality compounder given premium mix and Africa optionality, while Bharti Hexacom offers a regional growth lever within the group. Vodafone Idea’s risk-reward hinges on execution of funding, 4G coverage catch-up, and participation in 5G monetisation once balance-sheet stress abates.

Key watchpoints: tariffs, RMS prints, early 5G monetisation

The next six to nine months will be defined by tariff signaling, RMS prints, and early proof points on 5G monetisation.

December 2025 tariff scenarios and RMS/FCF impact

Base case among several brokers assumes a high single- to mid-teens headline hike around December 2025. If Jio resists or staggers the move, expect a more measured hike cadence to defend RMS into H1CY26. Conversely, a synchronized, sharper hike would likely favor Airtel’s near-term RMS and ARPU, but could pull forward investor confidence in sector FCF. Keep an eye on prepaid smart plans, postpaid family tiers, and FWA pricing as leading indicators.

Enterprise and vendor plays for 5G monetisation

Enterprises should anticipate tightened “pay as you use” constructs in mobility and IoT, with clearer SLAs for 5G features. Budget for modest uplifts but extract value via QoS-backed plans, MEC integration, and bundled security. Vendors should pivot from radio volumes to monetisation enablers: converged charging, analytics-led upsell, API exposure for network features, and vertical solutions for manufacturing, logistics, and retail. For operators, near-term priority is disciplined premiumisation, churn containment on price resets, and selective FWA expansion where unit economics beat fiber.

Equity views and targets: Airtel, RIL, Hexacom, Vi

Broker stances remain constructive on sector earnings momentum while highlighting divergent near-term catalysts across operators.

Broker calls, ARPU/EBITDA CAGRs, and price targets

Motilal Oswal maintains a positive sector view and prefers Bharti Airtel with a target price near Rs 2,365, while keeping Reliance Industries (Jio’s parent) at a buy around Rs 1,765. JM Financial projects roughly 12 percent ARPU CAGR through FY28, supporting 14–18 percent EBITDA CAGR for the sector, and highlights lower capex intensity post nationwide 5G. JM recommends buying Bharti Airtel (about Rs 2,460 target) and Bharti Hexacom (about Rs 2,195), is constructive on Jio into its IPO, and has an add on Vodafone Idea with a target near Rs 11.5. For investors, the setup argues for staying overweight incumbents with premium mix and clean FCF, while treating Jio’s tariff stance as the swing factor for RMS prints into the IPO window.