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Higher tariffs may bring Jio a re-rating, RIL valuation boost

An increase in rates likely to boost average revenue per user, improving the payback period and cash flows, move to help the company reach zero net debt by FY21.

By Ashutosh Shyam, ET Bureau |Updated: November 21, 2019, 09.11AM IST
ET Intelligence Group: Reliance Jio is set for a re-rating, boosting the valuations at India’s most valuable company, as the telecom arm of the energy-to-retailing conglomerate announced raising tariffs and taking steps the regulator would recommend to strengthen the industry and sustain investments. So far, the basic premise for telecom valuations had been a higher subscriber base that would
the fair value of Jio. In the near term, the Street is likely to revise upward its EV/EBITDA multiple to 9 times from 7.5-8 times currently for Jio to capture the benefit of higher tariffs, as the quantum of the increase is still unknown. In the near term, the Street would keenly watch Jio’s pricing point relative to subscribers.

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