Indian telecom company Reliance Jio has outbid its rivals in the race to dominate the next generation of digital services by spending $11 billion to auction the country’s 5G spectrum.
The auction pitting India’s richest tycoons against each other cost the country 1.4 billion.
Indian Communications Minister Ashwini Vaishnav said Monday that bidders spent a total of 1.5 trillion rupees ($19 billion) in the first 5G auction, in which companies bid to use certain frequency bands for telecommunications. The authorities want operators to start rolling out the services this year.
Reliance Jio, founded by tycoon Mukesh Ambani, outbid rivals including billionaire Sunil Bharti Mittal’s operator Airtel, which bid Rs 431 billion for the spectrum. Vodafone Idea, the UK telecom group’s local venture, spent Rs 188 billion.
Gautam Adani’s conglomerate, the Adani Group, has spent Rs2 billion on spectrum for industries such as power and manufacturing, rather than for consumer mobile networks.
Indian authorities and companies hope 5G will turbo-charge the growth of the developing nation’s digital economy, fueled by rapid mobile phone adoption over the past decade.
K Rajaraman, secretary of India’s communications ministry, said the auction results announced on Monday reflected a “very positive upswing in industry sentiment” and would lead to lower prices for users.
The result also cements Ambani’s rise to the top of India’s telecom sector. Since Jio was first launched in 2016, it has used ultra-cheap data to grab market share, sparking a price war that has sparked a wave of consolidation in the industry.
The company, whose investors include Facebook and Google, has about 400 million subscribers and a 37% market share, according to Jefferies analysts.
Ambani, who rivals Adani for the title of Asia’s richest man, wants to use Jio to transform Reliance from an oil refining and petrochemicals-focused conglomerate into Asia’s leading telecoms and digital services group.
“The speed, scale and societal impact of Jio’s 4G rollout is unparalleled anywhere in the world,” Ambani said in a statement. “Jio Leads India’s Journey into the 5G Era.”
Narendra Modi’s government is confident of boosting competition in the telecom sector as part of a broader agenda to lower India’s business costs and make services more accessible to the poor.
According to Rajaraman, about 40 million of the more than 700 million phones in the country are 5G enabled. “Going forward, more choices of phones will be available and prices will come down as volumes increase,” added Rajaraman.
Airtel has emerged as the strongest challenger to debt-heavy telecom giant Reliance over the years. Vodafone Idea, a joint venture between the British group and Indian conglomerate Aditya Birla, required a bailout this year, with the Indian government taking a 36 percent stake in the group.
India has a mixed record in conducting spectrum auctions, with previous efforts failing to attract enough interest after authorities set them too high a price. In 2008, the 2G auction caused a major political row over distribution irregularities.