The Adani Group’s entry into the 5G spectrum race and its plans to offer private captive network solutions could result in intensified competition for India’s top telcos who may see their potential revenue from enterprise services as well as from airwaves leasing take a hit, say industry executives and analysts.
Industry executives expect the cash-rich Gautam Adani-led conglomerate to engage in a possible bidding battle with Reliance Jio and
for 5G airwaves in both the coveted but expensive 3.3-3.67 GHz and the cheaper 26 GHz bands. This scenario could queer the pitch for cash-strapped (Vi) as the latter may be forced to either overbid or totally miss out on any meaningful participation in the auction, starting July 26, further weakening its position in the market.
“Adani’s entry into the 5G spectrum auction and its stated ambitions of offering private captive networks as a service would definitely threaten telcos’ future enterprise revenues streams, probably the mainstay of the 5G business,” Mahesh Uppal, director, Com First India, a telecoms consultancy firm specialising in spectrum regulatory matters, told ET.
Future enterprise business revenues are pegged at almost 40% of overall 5G revenues, according to industry estimates. But Adani’s surprise entry now threatens to rock the enterprises revenue apple cart for the telcos. Uppal added that India’s existing operators will face stiff competition from a powerful adversary like the Adani Group. The moneyed conglomerate will buy spectrum from the auctions and would have the ability to sell enterprise offerings, including private networks, as a service. In addition, like telcos, the new entrant can also lease out 5G airwaves to large corporates keen to invest in captive networks.
“To avoid or limit serious 5G enterprise business revenue losses, incumbent operators would have to be very competitive on the quality, innovation and pricing fronts with their factory automation and other 5G enterprise services offerings,” said Mayuresh Joshi, head of equity research at Indian unit of US brokerage William O’ Neil & Co.
Enterprise services by a telco include services like automating factories, setting up remote education centres or remote operation theatres, and storage solutions using its 5G airwaves. Spectrum leasing, on the other hand, refers to enterprises leasing spectrum from telcos for a fee and setting up captive networks on their own or in a tie-up with, say, a technology company.
The Adani Group,
Jio, Bharti Airtel and Vodafone Idea didn’t respond to ET’s emailed queries. On Saturday, the Adani Group said it does not intend to enter the consumer mobility space but would participate in the upcoming 5G spectrum sale to provide private network solutions along with enhanced cyber security at airports, ports & logistics, power generation, distribution, and manufacturing operations. It added that plans on bidding for spectrum aligns with its recent announcement of increasing the Adani Foundation’s investments in education, healthcare and skills development in rural areas.
“Even if Adani’s immediate 5G play is around private captive networks, it would definitely target 5G airwaves in both 26 GHz and the more expensive C-band (3.3-3.67 GHz) — also called mid-band — especially since the ecosystem for captives is now developed globally around the latter band and not so much around millimeter waves (26 GHz),” said a senior executive at one of three top carriers.