MUMBAI • Months after billionaire Mukesh Ambani's upstart Indian wireless carrier swept into the No. 1 spot, a trounced rival is mounting a comeback.
Bharti Airtel, an associate of Singapore's Singtel, is the best performer on India's stocks benchmark this year, jumping 26 per cent and reaching a record on May 19, amid optimism the carrier will continue to attract bigger-spending users.
The stock surged on Thursday in Mumbai after Reuters reported that Amazon.com was in early talks to buy a stake of at least US$2 billion (S$2.8 billion).
The comeback is a sharp turnaround for billionaire Sunil Mittal after gruelling competition with Mr Ambani's Reliance Jio Infocomm knocked Airtel off its perch in the world's second-biggest wireless market by users.
Mr Mittal's company reported a record loss in the last fiscal year, while a shock court order to pay US$3 billion in back fees forced the operator to raise capital.
Another rival, Vodafone Idea, is struggling to survive under a pile of debt.
"The market assumed Bharti Airtel would take months to recover from the onslaught of Reliance Jio," said Mr Arun Kejriwal, director at KRIS, an investment advisory firm in Mumbai. "But they raised funds from the market and have moved quickly to take advantage of the duopolistic nature of the Indian telecoms landscape."
Jio and former No. 1 Airtel have been battling over India's telecoms market since 2016, when Mr Ambani pushed his way in with a 4G service that offered free calls and cheap data packages.
That war of attrition prompted money-losing carriers to exit or merge with others, leaving only three non-state carriers, from about a dozen a few years ago.
Facing a demand from the government for US$4 billion in back fees, one of the survivors, Vodafone Idea, is cutting back coverage to save money and has said it will probably need government help to stay in operation.
Jio, Airtel and Vodafone Idea did not respond to requests for comment.
With an emerging duopoly, there is more at stake than just gathering hundreds of millions of subscribers and collecting monthly tariffs.
Mr Ambani has placed Jio at the centre of a digital platform he expects to drive his group's growth into e-commerce, payments and online entertainment.
Airtel has shown it intends to compete for the same turf through its payments, video-on-demand and e-commerce divisions.
The talks with US online retail giant Amazon are over a possible 5 per cent stake in Airtel, Reuters said on Thursday, citing anonymous sources.
A deal will help Amazon access the Indian wireless carrier's 300 million subscribers.
By adding high-value users, Airtel poses a rising challenge to Mr Ambani, who is just off raising more than US$10 billion in weeks from Facebook, General Atlantic, KKR & Co, Silver Lake Partners and Vista Equity Partners.
The deals give Jio a formidable profile, valuing its Jio Platforms at more than US$65 billion, compared with Airtel's US$40 billion market value.
Yesterday, Reliance said Abu Dhabi's Mubadala Investment Co will invest about US$1.2 billion in Jio Platforms, extending Mr Ambani's fund-raising streak.
Airtel is also raising cash to pay down fees related to the court ruling and as it expands 4G coverage across India.
Airtel's parent Bharti Telecom last month said it is seeking about US$1 billion by selling a stake in the Indian mobile carrier after its share price hit a record last month.
In January, Airtel raised US$3 billion in a sale of shares and bonds to help pay fees.
The share and bond sales drew investors despite Airtel's deteriorating profitability.
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