Reliance Jio Bharti Airtel and Now Adani Enterprises Compete To Roll Out 5G

Reliance Jio and Bharti Airtel have completed an All-India rollout of 5G networks. They have cumulatively aggregated over 100 million 5G customers according to Julian Gorman Head of Asia Pacific (APAC), GSMA. Gorman was speaking at the 7^th edition of the ETTelecom 5G/6G Congress 2024 held in March at London. Both Reliance Jio and Bharti Airtel have recently raised their rates, cartel-fashion, in an effort to be profitable.

The potential number of users in a country of 1.4 billion plus people is the great attraction. There are more than a billion phones in use already (1.18 billion per 2021 data). And a large proportion, even at the bottom of the pyramid, are smart phones, used at a minimum for entertainment streaming and the like. 5G will work faster and better. The gross revenue from the telecom industry was Rs 64, 801 crores ($8.74 billion) in the first quarter of FY 22 as per government data from then. At least another 500 million new internet users will be added in India in the five years from 2022 to 2027.

The prospects have recently lured the Adani Group also into the fray. This, after  it spent time denying that it intended to do so.

However, even with three big contenders, the competition is likely to intensify, and might grow uncomfortable. The pie is big enough to go around, and there is no absolute necessity to step on each other’s toes. Having said that, it will have to be a discovery process in tier 2,3, and 4 cities, even as jostling each other in the metro cities could benefit the consumer, if not the provider. The government will gain from further spectrum sales. Adani has only bought limited spectrum so far for its operations in Gujarat, and not enough to roll out a consumer foray.

Rural India too will be served much better than before, probably using satellite linkages, the cost of which will have to be absorbed by the companies till the  consumer numbers are large enough and viably clustered.

The other weak player in the current mix in India is Vodafone Idea (VI), back from the dead, but still ailing.  VI has succeeded in only rolling out a network in four circles it operates in, with the four vendors there. This is a minimum rollout obligation (MRO), to stay in the game, even though Vodafone Idea has not succeeded in rolling out a commercial network as yet.

 As of the end of 2023, some 5.6 billion people worldwide are using mobile telephony. Of these 58% are using broadband and 18% of these users are now using 5G. And the data usage per consumer in the second largest market for mobile telephony in the world and probably the cheapest, is growing exponentially.

The lucrative nature of the telecommunications beast has attracted both the Mukesh Ambani led Reliance Group and the Adanis. These groups are matched in size. Both are simultaneously in heavier businesses, the former anchored in petrochemicals and refining, and the latter in ports, infrastructure, transshipments. It is only Bharti Airtel that is mainly, and one might broadly suggest, only in telecommunications. Bharti has encountered some headwinds in its efforts to stay profitable, not being in a position to cross fertilise its yields.

India is rapidly establishing itself as the most digitalised country in the world. It is inexpensive, accurate, swift and relatively safe if all protocols are followed. More and more Indians are learning to trust the process, as the government vigorously promotes digital usage.

Mukesh Ambani was indeed an early entrant into telecommunications, but had to back off after the Reliance Group was divided between himself and his younger brother Anil. There was a seven-year period during which he could not compete with the Anil Ambani led Reliance Communications. At the end of this period, there was a second coming, christened Reliance Jio. Because of very competitive pricing and deep pockets, Reliance Jio soon built-up enviable numbers, both in terms of subscribers and market share. Reliance Communications meanwhile, sadly failed.  

Principal rival and survivor Bharti Airtel was helped by its win of the Mumbai and Delhi circles early in the day. Others, like Escotel, eventually collapsed after making heavy losses, because its/their circles were not so creamy. There were not many survivors out of a dozen that existed in 2016. Mukesh Ambani’s Reliance actually got a chance to launch afresh with free calls and cheap data. It soon gained a 40% market share.

Based on the Vodafone experience, presumably other international mobile telephony companies will stay away from India’s mass market, even in joint venture, because of its low rates. They may, at best become passive investors and leave the operations to the Indian operators.

The 6G rollout is also lurking in the wings, and happily, all three big players are able to take care of its demands. China had hoped to roll it out, along with 5G at cut-throat prices, not just in India but in Europe, America, and Canada. But it was not possible to allow it because of spying suspicions and security concerns. China would have done better to not be so predatory but it never seems to learn.

The Reliance Group has entered hospitality, retail, fashion, toys, hydrogen. Adani is in real estate development, green energy. Both are seeking multiple touch points with the consuming and aspirational public. The Ambani children are already at the helm of many of these new companies, with the 67 year old patriarch as overseer, patron and facilitator.

One can’t say about Bharti Airtel, because of its lack of diversification, but it is likely that both the Reliance Group and the Adanis will emerge soon as trillion dollar conglomerates. They will be willing and able to contribute even more to the mission of India becoming a developed country in all respects by 2047, our centenary year.

(976 words)

July 17^th, 2024

For: thesquirrels.in

Gautam Mukherjee