Six years ago, Mukesh Ambani introduced India with cheap data and free calls. Jio is now the telecom giant with 410 million subscribers. For those unaware, Ambani’s Jio Platforms Ltd. is a $95 billion enterprise that is 17% bigger than the hydrocarbons business he got from his dad.
Gautam Adani-led Adani Group, on the other hand, has been continuously rising up the ladder in every domain, right from green energy, defense manufacturing, airports or aviation, logistics, data, water, gas and mining, to real estate. Gautam Adani has been operating his businesses relentlessly. However, Adani was yet to enter the telecom world which would be a direct assault on Ambani’s Jio. Now, they seem to have overlapping ambitions and telecom is likely to become a battlefield for two of the world’s richest people.
Gautam Adani enters telecom sector
A report by The Economic Times reported that an intense three-way fight is likely to take place between India’s largest telco Jio, second-ranked Airtel, and new entrant Adani for 5G airwaves.
While, in the airwaves sale which will begin from July 26,Reliance Jio Infocomm and Bharti Airtel are believed to bid for 5G spectrum worth Rs 55,000-60,000 crore and Rs 45,000-50,000 crore, respectively, The Adani group, through cash strapped Vodafone Idea(Vi), too, is expected to bid spectrum worth Rs 5,000-6,000 crore.
“We are participating in the 5G spectrum auction to provide private network solutions along with enhanced cybersecurity in the airport, ports and logistics, power generation, transmission, distribution, and various manufacturing operations,” the Adani group said in a press statement.
Balaji Subramanian of IIFL securities said “if Adani ends up buying out Vodafone Idea later on for a full-fledged telecom play, then the stock of Indus Towers could rerate materially.”
“Otherwise, there are no real triggers for Indus. Of course, what will hold the key is the update which they may provide on the Q1 earnings call on the status of renewals of master service agreements (MSA),” he said.
Adani battling over Vodafone?
The speculations that Adani could end up offering mobile telephone services and is eyeing debt-ridden Vodafone Idea have set the telecom market abuzz. While it is yet to be revealed, the billionaire has the option to sign intercompany roaming (ICR) arrangement with Vodafone Idea for a full-fledged telecom foray.
“Plagued by an intense competitive environment in the last two decades, the thought of a new entrant in the sector gives investors jitters for the next round of severe competition, which could derail the current structural benefits (ongoing pricing improvement and market share gains),” domestic brokerage firm Motilal Oswal said. He added that acquiring Voda Idea in the current form and shape may require over Rs 2,500 billion in capital investment.
“We note that the Government of India will own a 33 per cent stake in Vodafone Idea post the conversion of the company’s interest dues into equity and the government has indicated it will look to sell such stake at an appropriate time to realise the due amounts. The government has not clarified whether such a stake could be sold to a potential new entrant,” Goldman Sachs also said.
Adani vs Ambani over telecom
The competition between Gautam Adani and Mukesh Ambani is nothing new. However, it is now expanding to telecom, after Adani confirmed his participation in 5G spectrum auctions. It is a public knowledge that the entry of Reliance Jio brought revolutionary changes in India’s telecommunication market. The richest and most powerful corporate house of India entered in telecommunication segment in September 2016.
Read more: As predicted by TFI, Gautam Adani has left Mukesh Ambani miles behind
Reliance Jio is now the largest telecom player in the country in terms of subscriber base as well as revenue. Mukesh Ambani, second-generation industrialist has defeated the oldest business house of the country with his innovative strategies.
On the other hand, the incredibly growing Indian Conglomerate, Adani Group, is incessantly trying to expand its roots in almost every sector of the economy. The Ahmedabad-based businessman is focusing on the sectors that can be the key to a strong and modern India. He is rapidly expanding in green energy, defence, airports or aviation, logistics, data, water, gas, mining and real estate. His aim is to modernize India by developing the areas where the government wants to build massive capacity.
However, both the industrialists, till now, were revolving in their own orbit. With decision of Adani to enter the telecom world, it seems that he has a master plan to counter the dominance of Mukesh Ambani’s Jio.
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