Gautam Adani-led Adani Data Networks has said that it will participate in the upcoming 5G spectrum auction to provide private network solutions at a number of its business verticals such as airports and ports. It has clarified that it does not intend to be in the “consumer mobility space”.
Industry insiders and analysts are viewing Adani’s entry into the country’s telecom space as a potential disruption that could have repercussions for the sector.
What does Adani’s participation in the 5G auction mean for the telecom industry?
In a mandatory disclosure made to the the Department of Telecommunications (DoT) ahead of the auction, the Adani Group said that it was issued a letter of intent by the DoT for the grant of a unified licence for the Gujarat circle.
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Industry executives said that technically, the licence will allow the company to offer long distance calls and Internet services commercially. They also said that with the entry of Adani Data Networks, and with the established players looking to strengthen their hold in the industry, the spectrum auction, which is scheduled to start on July 26, may see aggressive bids for some frequency bands.
However, the Adani Group has said that it has no intention to be in the consumer mobility market, and is participating in the auction to develop its own private 5G network to deploy at its business verticals. A Goldman Sachs report said that while Adani has said it would not enter the consumer space, “we believe if the Adani Group does end up buying spectrum in the upcoming auction, it could potentially increase competition in enterprise 5G, in addition to opening the doors for the Adani Group to expand into consumer mobile services over time”.
Brokerage group CLSA said that the entry of the group could create uncertainty over spectrum pricing. “The question is why would Adanis bid in auction versus awaiting a direct spectrum assignment? Adani’s entry will create uncertainty over spectrum pricing in the 5G auctions, which was expected to see bidding competition primarily between Bharti Airtel and RJio (Reliance Jio),” it said in a report.
Last week, while confirming its participation in the 5G auctions, the Adani Group had said, “As India prepares to roll out next generation 5G services through this auction, we are one of the many applicants participating in the open bidding process. We are participating in the 5G spectrum auction to provide private network solutions along with enhanced cyber security in the airport, ports & logistics, power generation, transmission, distribution, and various manufacturing operations… Our intention is not to be in the consumer mobility space”.
Aggressive bidding likely
The spectrum auction, scheduled to start on July 26, may see aggressive bids for some frequency bands, with the entry of Adani Data Networks and established players looking to strengthen their hold in the industry.
The conglomerate said that as it builds its own digital platform including super apps, data centres, and industry command & control centres, it will need ultra high quality data streaming capabilities through a high frequency and low latency 5G network across all its businesses.
What are private 5G networks?
Last month, alongside announcing the spectrum auction for rollout of 5G services across the country, the government had announced the proposal for tech companies and other enterprises to acquire spectrum directly from it to test and build industry 4.0 applications, such as machine-to-machine communications, the Internet of Things (IoT), artificial intelligence (AI), etc.
These networks are called private captive networks, as they are set up to serve a specific organisation, and not the general population.
The DoT, in a set of rules issued last month, had said that companies wishing to set up private 5G networks could obtain spectrum from the government directly, and would be required to take a 10-year renewable licence, for which the government would not charge any licence fee.
However, the DoT has said that it would undertake demand studies, and seek Telecom Regulatory Authority of India’s (Trai) recommendations for direct assignment of spectrum to such enterprises.
Alternatively, enterprises can lease spectrum from one or more telecom companies, and would be allowed to do so after submitting to the government details of the spectrum band, the quantum of spectrum, the period of lease, the geographical area, and the geo-coordinates of the logical perimeter of the defined premises, according to the DoT rules.
Who else is participating in the auctions?
Apart from the Adani Group subsidiary, the three other telecom companies, Bharti Airtel, Reliance Jio and Vodafone Idea (Vi), have applied to participate in the spectrum auctions, as per a notification by the DoT.
The Adani subsidiary has a net worth of Rs 248.35 crore, according to its disclosures to the DoT. Bharti Airtel’s net worth as of March 31 was Rs 75, 887 crore with a paid up capital of Rs 2,795 crore; Reliance Jio’s net worth was Rs 1,97,790 crore with a paid up capital of Rs 1,54,125 crore.
Loss-making Vodafone Idea has a negative net worth of Rs 80,918 crore with a paid up capital of Rs 32,119 crore.