NEXUS HR POST A JOB SITEMAP HOT JOBS FAQS
Logo                    

Latest Updates « Go Back
Spectrum auction: Reliance Jio Infocomm looms large as formidable rival to Bharti Airtel, Vodafone Group
  If he bets big, billionaire Mukesh Ambani will emerge from this week's Indian spectrum auction armed with spectrum that could make his Reliance Industries (RIL) Ltd a formidable rival to market leaders Bharti Airtel Ltd and Vodafone Group PLC.

Even if he bids modestly, Asia's second-richest man can walk away with airwaves that would allow his Reliance Jio Infocomm to compete in the cut-throat Indian market for basic phone services. The company plans to offer 4G services but has yet to launch any.

Neither prospect is attractive for carriers that have been enjoying increasing pricing power after years of razor-thin margins. Shares in India's biggest cellular carriers lost between 4-7 percent in a single day after Reliance threw its hat in the ring for this week's auction and have yet to recover.

At the end of the first day of bidding on Monday, the government received $7 billion worth of total bids and looked set to top its minimum target of raising $1.8 billion initially.

"Reliance will get into voice, there is no doubt about that," said Naveen Kulkarni, analyst at PhillipCapital India.

"With Reliance Jio entering, the competition again hots up. That will mean a decline in tariffs. That essentially will mean inability of incumbents to take tariff hikes," he added.

Reliance, which generates most of its $70 billion revenue from energy and refining, returned unexpectedly to telecoms in 2010 by acquiring nationwide 4G permits. It has invested roughly $5 billion in the business to date without seeing a return, to the annoyance of some of its investors.