Mumbai, Aug 26 (IANS): Remaining bullish overall on Reliance Industries, leading merchant banker Morgan Stanley says it expects the Jio 4G telecom services to grow to 40 million subscribers in the next fiscal and add $2 billion in revenues, with a positive cash flow by 2019-20.

"We expect Reliance-Jio to generate more than $2 billion revenues in 2017-18 with revenue market shares of 2 per cent in voice and 19 per cent in data, leading to a 6 per cent overall revenue market share," Morgan Stanley Research said in its latest report.

"We believe Reliance-Jio would add more than 40 million subs in 2017-18, at an average revenue per user of Rs 300. We expect it to turn free cash flow positive in 2019-20," the report said, adding the company has so far spent $21 billion on this business with network rollout largely complete.

"We have increased our cumulative project capital expenditure estimate for Reliance-Jio by over 10 per cent, assuming spectrum spending of $1.5 billion in the coming auction. The 800 MHz and 1,800 MHz will be key bands of interest."

Commenting on the overall business outlook for the group, Morgan Stanley said some project delays and higher capital expenditure led Reliance Industries to under perform the sensitive index of BSE by 13 per cent in the last five months.

"But we think this is set to change. By March 2017, Reliance Industries will commercially commission $50 billion in projects, leading average free cash flow of $5 billion for the next three years," referring to the cash it generates after the capital expenditure.

The merchant banker said all eyes are now on the commercial launch of Jio 4G services.

"The telecom venture, Jio, has made great progress in its test launch. It has garnered as much as 20 per cent data volume market share with free usage preview offer. Also, Jio is being offered on multiple 4G LTE handsets, increasing flexibility for customers," it said.