Ambani vs. Adani in 5G auction but no direct market shock yet | Economic news

New Delhi: For years they tiptoed each other, but now groups led by billionaires Mukesh Ambani and Gautam Adani will be in direct competition for the first time when they take part in the sale later this month auction of waves capable of providing fifth-generation telecommunications or 5G services.

But the rivalry between the two politically well-connected Gujarati businessmen is yet to see a real market clash despite the overlaps.

On Saturday, the Adani Group confirmed its intention to participate in the July 26 5G spectrum auction, but said the airwaves it was looking for was to set up a private network to help digitize its business, from airports to energy and data centers. This meant there was no entry into the consumer mobile phone space, where Ambani’s Reliance Jio is the biggest player.

Jio as well as telecommunications czar Sunil Bharti Mittal’s Bharti Airtel and Vodafone Idea Ltd – the other two telecom companies dominated in the country – have also filed applications to participate in the 5G auction, three sources with knowledge of the matter said.

While the three will be bidding to grab spectrum to support a pan-India rollout of 5G voice and data services, Adani will be competing to get the same airwaves for private captive networks.

Incidentally, telecom companies in the run-up to the auction have been fiercely opposed to any direct allocation of spectrum to non-telecom entities for setting up private captive networks, as it would have serious implications for their business. They wanted non-telcos to lease spectrum from them or set up private captive networks for them. But the government weighed in favor of private networks.

Adani and Ambani – the country’s wealthiest – had taken contrasting approaches to business diversification, which in recent months have seen increasing overlap.

While Ambani, 65, has moved from oil refining and petrochemicals to telecommunications and consumer retail businesses, Adani has diversified from mining ports to coal production, energy distribution, airports, data centers and more recently cement and copper.

Adani, 60, has in recent months set up a subsidiary for a foray into petrochemicals – a business Ambani’s father, Dhirubhai, started before his downstream and upstream operations.

Ambani also announced multi-billion dollar plans for new energy activities, including Giga factories for solar panels, batteries, green hydrogen and fuel cells. Adani, which previously announced plans to become the world’s largest renewable energy producer by 2030, also unveiled its hydrogen ambitions.

Sources, however, said that while there is overlap in the clean energy space, there is no direct competition between the two. As Adani Group seeks to split water using solar energy to produce green hydrogen, Ambani’s Reliance plans to produce hydrogen from natural gas and other capture-backed hydrocarbons and carbon storage.

“Where is the direct competition,” asked a source. “Adani will desalinate seawater for use in electrolyzers to produce green hydrogen while Ambani seeks to decarbonize its oil business.”

And while they will have a showdown at the spectrum auction, there won’t be any direct competition on the ground yet, another source said.

Reliance has the largest refining complex in the world at Jamnagar in Gujarat and is also one of the leading manufacturers of polymers, polyester and intermediate fibers. Adani, on the other hand, is focused on coal in the hydrocarbon space, with mines in India, Indonesia and Australia, and thermal power plants.

While Ambani has made a slew of investments in the clean energy space, Adani’s petrochemical ambitions have stalled twice – the Covid pandemic led to the mothballing of a $4 billion acrylic complex. dollars near Mundra in Gujarat which was planned in collaboration with BASF SE, Borealis AG and Abu Dhabi National Oil Co (Adnoc) and a plant with CPC Corp of Taiwan could not make much progress either.

But their balance sheets are very different. While Adani Group companies have borrowed, Ambani has invested cash generated from traditional oil refining and petrochemical businesses in new areas.

Ambani raised $27 billion in 2020 from Facebook, Google and a range of private equity funds. Adani, which has sold stakes in renewable energy company, gas distribution company and new energy unit to French TotalEnergies SE, is no slouch with $17 billion spent on 32 acquisitions.

On Saturday, Adani said the spectrum he intended to buy was “to provide private network solutions as well as enhanced cybersecurity in airport, ports and logistics, power generation, transmission, distribution and various manufacturing operations”.

The Adani Group plans to use the airwaves for its data center as well as the super app it is building to support businesses from electricity distribution to airports, gas retail to ports.

“As we build our own digital platform encompassing super applications, cutting edge data centers and industry command and control centers, we will need very high quality data streaming capabilities via a high-frequency, low-latency 5G network across our businesses,” he said. in a report.

But all this does not yet mean a market confrontation with Ambani.

Donald E. Patel