Mukesh Ambani-led Reliance Jio, the telecom arm of Reliance Industries Lts, and Anil Ambani-controlled Reliance Communications are likely to avoid a combative approach, staying away from each other’s territory, when they bid for the 2G spectrum auction, beginning February 3.
Reliance Jio executives indicated that the company would bid for 900-megahertz (MHz) spectrum more aggressively and will be adopt a cautious stance on circles offered in the 1800 MHz band. RCom sources meanwhile said their priority was data and 1800 MHz suited them most.
RIL, sitting on a cash reserve of more than Rs. 80,000 crore, will bid aggressively in the 900 MHz band in the lucrative circles of Delhi, Mumbai and Kolkata, sources said. While RCom, with a debt burden of more than Rs. 40,000 crore, may not bid in the 900 MHz band in the three metros, a company source said.
Analysts with Goldman Sachs and Bank of America Merrill Lynch, however, said that Reliance Jio should opt for the 1,800 MHz band to be compatible with its broadband spectrum. “Theoretically they may be right but we have to see the practical aspect,” an executive in Reliance Jio’s regulatory team said.
Spokespersons of both companies declined to comment about the strategy in the forthcoming 2G-spectrum auction.
The picture will be clear on January 20 when ownership details (the earnest money deposit or EMD is not revealed but is made available through RTI), would be published by the Department of Telecommunications.
The entry of Reliance Jio in the auction, according to analysts spells doom for three operators. “We view the participation of Reliance Jio, as a negative outcome for incumbents (Bharti, Vodafone and Idea Cellular),” according to a Deutsche Bank research report.