Reliance Jio Infocomm Ltd., owned by Mukesh Ambani, paid the highest pre-auction deposit, indicating that it will likely be the most competitive bidder in the sale that begins today.

Some of India’s wealthiest businessmen are being drawn into the fight for the fifth-generation airwaves, and billionaires like Mukesh Ambani and Gautam Adani are expected to join a host of other players in offering up to $14 billion for the frequency rights that could determine who rules the digital era.

Adani Data Networks Ltd. is the surprise entrant whose bids will be closely watched as competitors try to map out its telecom ambitions. While Ambani’s Reliance Jio Infocomm Ltd. has paid the highest pre-auction deposit signaling it’s likely to be the most aggressive bidder in the sale that starts Tuesday, it is the surprise entrant whose bids will be closely watched. The other bidders are the wireless providers Bharti Airtel Ltd., run by billionaire Sunil Mittal, and Vodafone Idea Ltd., a partnership between Vodafone Group Plc and Kumar Mangalam Birla’s group.

As much as 1.1 trillion rupees ($14 billion) could be raised from the sale of the airwaves, according to a June estimate by the local rating agency ICRA Ltd. The Adani empire, which earlier this year surpassed Ambani as Asia’s richest man, is downplaying its entry into a brand-new playing field for the group. It claimed that it has no plans to compete with Ambani in the Ambani-dominated consumer mobile market and that its interest in 5G waves is focused on “private network solutions” and improving cybersecurity at the company’s ports and airports.

Nevertheless, the move comes as the two businessmen increasingly tread similar ground, with Adani in particular making investments in fields typically linked to Ambani, who disrupted the Indian telecommunications sector with Reliance Jio’s incredibly cheap services almost six years ago. India is at a pivotal point in its digital development, with many businesses vying for a piece of the intersection between mobile and the emerging e-commerce landscape, including multinationals like Walmart Inc. and Amazon.com Inc.

However, when Adani Data paid only 1 billion rupees as a deposit for the auction, speculation that 5G was going to become a flashpoint between Ambani and Adani was somewhat subdued. Brokerages frequently view the payment as a crucial sign of the level of interest exhibited by a bidder.

Adani Data’s modest deposit, which was in line with its declaration that it would only build a private 5G network and not turn into a full-fledged wireless operator, helped ease the concern of established players in the sector. According to data provided by the government, Reliance Jio deposited 140 billion rupees, which is significantly more than Bharti Airtel’s 55 billion rupees and Vodafone Idea’s 22 billion rupees.

“India will benefit from a massive 5G roll out, whether it is Adani or Ambani, “said Utkarsh Sinha, Managing Director of boutique investment banking firm Bexley Advisors. “Adani’s entry has upended firmly established Reliance Jio, and the enormous earnest money commitment shows that they recognize the value of 5G and can’t afford to miss out on it.”

The government of Prime Minister Narendra Modi, which is attempting to control inflation and reduce the fiscal deficit, will benefit financially from the auctions. For a 20-year period, the South Asian country intends to sell 72 gigahertz of airwaves in a variety of frequency bands, from 600 megahertz to 26 gigahertz. In an effort to catch up to nations like South Korea and China that have had 5G networks for years, India has also permitted businesses to pay in 20 evenly spaced installments with no upfront payment.

Analysts’ Opinions

Inc. Nomura Holdings (Aditya Bansal)

  • After making a small earnest money deposit, concerns about Adani Group’s entry into the telecom sector have diminished; the investment will probably be between 8 and 10 billion rupees.
  • Expect a potential outlay of between 405 billion and 600 billion rupees because Reliance Jio has previously submitted earnest money deposits that were much higher.
  • Around 400 billion rupees could be spent overall by Bharti Airtel, and 184 billion rupees could be spent overall by Vodafone Idea.

A.G. Credit Suisse (Led by Varun Ahuja)

  • Reliance Jio’s substantial earnest money deposit is an enabler rather than a guarantee of significantly higher auction expenditures.
  • Bharti Airtel may only bid for 5G spectrum, which includes 100MHz in the 3.5GHz band and 500MHz in the 26GHz band. It may also add spectrum in the 900MHz and 1800MHz bands only in certain areas, including Delhi, Mumbai, and Kolkata.
  • The deposit made by Vodafone Idea is enough to buy the necessary 5G spectrum.

Stanley Morgan (Led by Gaurav Rateria)

  • Sharp aggression or bidding above the reserve price seems unlikely given the sufficient spectrum availability.
  • With its earnest money deposit, Reliance Jio has the flexibility to bid for both current and new bands in addition to the 5G bands.

CLSA (Led by Deepti Chaturvedi)

  • The low earnest deposit amount made by Adani, which is lower than even Vodafone Idea’s Reliance, is a key surprise. 
  • Jio and Bharti Airtel will probably take the lead in the auction because Vodafone Idea’s earnest money deposit is insufficient to bid for 5G spectrum across all of India, let alone all of its existing markets.