Is India’s wealthiest man going to fight over $2 customers?

It was too peaceful to last. The ruthless and brutal destruction of capital in India’s telecommunications industry was only just beginning to give way to a period of calm. The three operators who made it through a dozen in 2016 should be grateful for the end of a crippling price war. The next round of investment will be supported by a stable market share and high revenue per user.

So imagine the angst generated by the news that billionaire Gautam Adani, owner of a port and an airport, who had nothing to do with telecommunications until now, will bid for 5G spectrum in this month’s auction.

Mukesh Ambani, another tycoon, disrupted India’s wireless market six years ago. With low-cost data and free phone calls. With 410 million customers, he is now the market leader. Add services like digital advertising, e-health, and mobile education to core telco revenue, where the big rewards are still a few years away. According to Jefferies, Ambani’s Jio Platforms Ltd., which includes Meta Platforms Inc. and Alphabet Inc. Investors, is a $95 billion venture, 17 percent larger than the hydrocarbon empire he inherited from his father.

Should Ambani Adani start planning an attack now? They are rivals who have progressed to different classes thus far.

Ambani expanded into consumer businesses like telecommunications and retail to diversify the group’s reliance on refining and petrochemicals. Adani’s customers in transportation, coal, and power were industrial and utility scale. However, they now have overlapping ambitions, such as in renewable energy and media. Analysts at Motilal Oswal in Mumbai see a “consumer inclination” within the Adani Group, which could exit its position as the country’s leading edible oil brand. Could telecommunications be the battleground for the world’s two richest people?

Adani Group denies any such plan exists. Analysts are also divided on whether it is worthwhile to fight over the sector.

According to Bank of America, there is no viable business case for any non-4G telco in consumer mobility due to low tariffs, limited differentiation space, insufficient spectrum, and low return on investment. The No. 2 players, Jio and Bharti Airtel Ltd., are financially stable. Vodafone Idea Ltd has avoided bankruptcy or recession sales, as many other companies have, thanks to a state-backed rescue.

Even if Adani decides to make a full-fledged telecom entry by purchasing the struggling No. 3 player, recouping the telco’s lost investment would require billions of dollars in capital expenditure. And for what purpose? What is Jio making right now? Only $2 per month per subscriber. The efficient use of debt financing does not appear to be what drives the Adani juggernaut. According to Bank of America analysts, the opportunity for a new telco is limited to the enterprise sector.