Reliance Jio outbids rivals in India’s $19bn 5G auction

Indian telecoms company Reliance Jio has spent $11bn at the country’s 5G spectrum auction, surpassing rivals in the race to dominate India’s next generation of digital services.

The auction, which pitted India’s richest tycoons against one another, paves the way for the arrival of ultrafast 5G telecom services to the country of 1.4bn people.

Ashwini Vaishnaw, India’s communications minister, said on Monday that the bidders spent a total of Rs1.5tn ($19bn) at the first 5G auction, where companies bid on the use of certain frequency bands for telecoms. Authorities want operators to begin introducing services later this year.

Reliance Jio, founded by tycoon Mukesh Ambani, outbid rivals including billionaire Sunil Bharti Mittal’s operator Airtel, which bid Rs431bn for spectrum. Vodafone Idea, the UK telecom group’s local venture, spent Rs188bn.

Gautam Adani’s conglomerate, Adani Group, spent Rs2bn on spectrum for its industrial businesses, such as power and manufacturing, rather than for a consumer mobile network.

Indian authorities and companies hope 5G will turbocharge the growth of the country’s digital economy, which has thrived on the back of the rapid adoption of mobile phones over the past decade.

K Rajaraman, secretary in India’s ministry of communications, said the auction results announced on Monday reflected “a very positive uptick in the mood of the industry” and would lead to a fall in prices for users.

The outcome also solidifies Ambani’s rise to the top of India’s telecom sector. Since Jio first launched in 2016, it has used ultra-cheap data to gain market share and sparked a price war that forced a wave of consolidation within the industry.

The company, whose investors include Facebook and Google, has around 400mn subscribers and a 37 per cent market share, according to analysts at Jefferies.

Ambani, who vies with Adani for the title of Asia’s richest man, wants to use Jio to transform Reliance from a conglomerate focused on oil refining and petrochemicals into a leading Asian telecom and digital services group.

“The speed, scale and societal impact of Jio’s 4G rollout is unmatched anywhere in the world,” Ambani said in a statement. “Jio is set to lead India’s march into the 5G era.”

Narendra Modi’s government has credited itself with fostering competition in the telecoms sector as part of a broader agenda of bringing down India’s business costs and making services more affordable for poorer Indians.

Rajaraman said that about 40mn of the country’s more than 700mn handsets were 5G-enabled. “Going forward, more choices of handsets will be available, and prices will go down once the volumes go up,” Rajaraman said.

Airtel has emerged as Reliance’s most formidable competitor in a telecoms sector plagued for years by high levels of debt. Vodafone Idea, a joint venture between the UK group and India’s Aditya Birla conglomerate, required a bailout earlier this year, with India’s government taking a 36 per cent stake in the group.

India has a mixed record when it comes to running spectrum auctions, with past efforts failing to attract enough interest after authorities priced them too high. A 2G auction in 2008 sparked a major political scandal over alleged wrongdoing in the allocation.