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Mukesh Ambani faces dilemma after hearing about Gautam Adani’s 5G plan: report


The two billionaires also have a significant overlap in green energy (File)

In June, billionaire Mukesh Ambani and his aides ran into an unexpected dilemma when debating what to do next to form his empire’s trading target.

Reliance Industries Ltd. d’Ambani was planning to buy a foreign telecommunications giant, when they learned that Gautam Adani – who had overtaken Ambani as Asia’s richest man a few months earlier – was planning to bid for the first big sale of 5G waves in India. , according to people familiar with the matter.

Reliance Jio Infocomm Ltd. d’Ambani is the leading player in the Indian mobile phone market, while the Adani group does not even have a license to offer wireless telecommunications services. But the very idea that he could circle land so critical to Ambani’s ambitions has put the tycoon’s camp on high alert, according to the people, who asked not to be named to discuss. information that is not public.

A group of aides advised Ambani to pursue the goal overseas and diversify beyond the Indian market, while another advised to conserve funds to fend off any challenges at home, according to people familiar with the discussions.

Ambani, worth $87 billion, ultimately never bid for the foreign firm, in part, the people said, because he decided it would be smarter to retain firepower financially if challenged by Adani, who has seen his net worth grow more than anyone. elsewhere in the world this year – to $115 billion, according to data from the Bloomberg Billionaires Index.

After peacefully expanding in their respective fields for more than two decades, Asia’s two richest men are increasingly treading the same ground, as Adani in particular aims beyond his traditional areas of interest. .

This sets the stage for a clash with growing implications both beyond India’s borders, as well as within the country as the $3.2 trillion economy embraces the digital age, sparking a race to wealth beyond the commodity-focused sectors where Ambani and Adani made their early fortunes. Emerging opportunities – from e-commerce to streaming and data storage – are reminiscent of America’s 19th-century economic boom, which fueled the rise of billionaire dynasties like the Carnegies, Vanderbilts and Rockefellers.

The two Indian families are also hungry for growth and that means they will inevitably meet, said Arun Kejriwal, founder of Mumbai-based investment advisory firm KRIS, which has followed the Indian market and the two billionaires for two decades.

“Ambanis and Adanis will cooperate, coexist and compete with each other,” he said. “And finally, the fittest will prosper.”

Representatives of the Adani and Ambani companies declined to comment for this story.

In a July 9 public statement, Adani Group said it has no plans to enter the mainstream mobile space currently dominated by Ambani, and will only use the airwaves purchased during the sale. auctioned off by the government to create “private network solutions” and to improve cybersecurity at its airports and ports.

Despite such comments, speculation is rife that it might eventually branch out into offering wireless services to consumers.

“I don’t underestimate a calculated entry of Adani into the mainstream mobile space later to compete with Reliance Jio, if not now,” said Sankaran Manikutty, a former professor at the Indian Institute of Management of ‘Ahmedabad, who remains a visiting faculty member. and has worked extensively on family businesses, telecommunications and strategy in emerging economies.

For decades, Adani’s activities have focused on sectors such as ports, coal mining and shipping, areas that Ambani has avoided amid its own heavy oil investments. But over the past year, that has changed dramatically.

In March, the Adani Group reportedly explored potential partnerships in Saudi Arabia, including the possibility of buying its giant oil exporter, Aramco, Bloomberg News reported. A few months earlier, Reliance – which still derives the majority of its revenue from crude oil-related businesses – scrapped a plan to sell a 20% stake in its energy unit to Aramco, reversing a deal that had lasted two years. . the pipeline.

The two billionaires also have a significant overlap in the area of ​​green energy, with each pledging to invest more than $70 billion in a space strongly linked to the priorities of Prime Minister Narendra Modi’s government. Meanwhile, Adani began signaling deep ambitions in digital services, sports, retail, petrochemicals and media. Reliance d’Ambani already dominates these sectors or has big plans for them.

In telecommunications, if Adani begins to heavily target consumers, history suggests that prices could fall at the onset of competition, but rise again if the two companies achieve a duopoly, with the Indian wireless space currently dominated by three private actors. When Ambani made its first foray into telecommunications in 2016, it offered free calls and super-cheap data, a bold move that saw costs drop across the board for consumers, but are rising again at as it consolidates its control.

On the surface, the two men seem quite different. Ambani, 65, inherited Reliance from his father, while Adani, 60, is a self-made businessman. But they also have remarkable similarities. Largely media-shy, the pair have a history of fierce competition, disrupting most industries they set foot in and then dominating them. Both have excellent project execution skills, are extremely detail-oriented and driven to pursue business goals with a history of delivering great projects, say analysts and executives who have worked with them.

Both hail from the western province of Gujarat, Modi’s home state. They have also closely aligned their business strategies with the Prime Minister’s national priorities.

Not all of Adani’s deals overlap with Reliance, and he has been ahead with M&A spending, though Ambani has remained cautious about heavy spending overseas amid an uncertain global backdrop. Adani Group acquired the port of Haifa in Israel in July for $1.2 billion. In May, he bought the Indian cement works from Holcim for 10.5 billion dollars.

For now, most of Adani’s new forays are so nascent that the full impact is hard to gauge immediately. Still, analysts agree the pair are likely to play a big role in reshaping India’s business landscape, potentially leaving ever larger swaths of the economy in the hands of two families.

That could have stark consequences in a country that has only seen income disparity widen during the pandemic.

While India’s current economic advance is similar to what is known as America’s Golden Age in the 19th century, the South Asian country now faces risks of inequality. growing, said Indira Hirway, director of the Center for Development Alternatives in Ahmedabad.

“The rapid diversification and overlaps between them can lead to a duopoly if they work together, which hurts smaller businesses in those sectors,” Hirway said. “If they start to compete with each other, it may impact the balance of the trading landscape as the two conglomerates will compete for resources and raw materials.”

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