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Mumbai: Reliance Industries Ltd (RIL) is considering an initial public offering (IPO) of its telecom unit Reliance Jio Infocomm Ltd in the next two to three years, a person with knowledge of the matter said.

RIL plans to list Reliance Jio on the exchanges after the company’s consumer businesses, which includes Reliance Jio, overtakes its energy business in terms of revenue, the person said on condition of anonymity. “Reliance Jio’s plans are massive and when it reaches that stage, the company shouldn’t be a 100% subsidiary of a refinery company," the person said.

Mukesh Ambani-led Reliance Jio set off a brutal price war among telcos when it launched services in September 2016, triggering a wave of consolidation in one of the world’s most crowded telecom markets. The consolidation of the industry into about three large operators and an increase in Reliance Jio’s market share will set the stage for the listing of the company.

“Many RIL investors don’t understand data services or digital services and many of those who want to invest in digital services may not want to invest in refineries," the person cited above said. “At some point, when everything has stabilized, you will have to give investors options to invest where they want to."

“If we keep Reliance Jio as a 100% subsidiary of RIL, some RIL investors are bound to say that they don’t understand digital services. Which is one of the reasons our stock price doesn’t reflect our true potential," the person said, adding that RIL’s consumer business will be on a “par with its energy business in three years".

Reliance Jio’s short-term plan is to engage with customers, and continue to add subscribers.

“There is no cutoff time, and there are a lot of decisions that need to be taken (for the listing to happen)," the person said, adding that keeping Reliance Jio separate from RIL is going to be a complicated decision, which not many at the company are currently prioritizing.

In December, Bloomberg first reported RIL was considering a Reliane Jio IPO by early 2019, citing unidentified people aware of the matter.

Emails sent to spokespersons for Reliance Jio and RIL didn’t elicit a response till press time.

In the quarter ended 31 March, Reliance Jio added more than 9.4 million subscribers, taking its total users to 186.5 million, according to data compiled by the Telecom Regulatory Authority of India (Trai), becoming India’s fastest-growing telco. During the same period, Idea Cellular Ltd added 9.1 million subscribers, while Bharti Airtel Ltd and Vodafone India added 8.4 million and 5.6 million users, respectively.

Reliance Jio can be expected to add more customers during the June quarter, the person cited above said. “At Reliance Jio, customer engagement is a priority, with focus being on adding subscribers. Revenue market share will eventually come," the person said.

For the moment though, Reliance Jio will be functioning as an entity under RIL. “The balance sheet is stable and steady and RIL can invest more (in Reliance Jio)," the person added.

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