Adani Gets LoI For 5G Services In Gujarat; Final List Of Bidders On July 20

The Adani group has secured a letter of intent (LoI) from the Department of Telecommu­nications (DoT) for the grant of a unified licence for the Gujarat circle. The LoI was issued on June 28.

The unified licence will allow the group to provide long-distance call and internet facilities in the Gujarat circle. The group, however, has stated that it has no plans to offer consumer mobility service and intends to use spectrum for captive private networks. It will have to obtain separate licences to provide services in other circles.

The Adani group is the latest entrant in the telecom sector and has applied for participation in 5G spectrum auction. The DoT released details of companies participating in the spectrum auction on Tuesday.

The pre-qualification of bidders will take place on July 18 and the final list of bidders will be declared on July 20. Bidding will be held for airwaves in multiple bands, including the 3.5 GHz band and milimetre wave band that is used for 5G services.

The Adani group has made the application through a newly incorporated Adani Data Networks Limited. It has a net worth of Rs 248.35 crore. Net worth of promoter firm Adani Enterprises (Rs 4,730.66 crore) will be used for determining eligibility for the bids.

Adani group is a new entrant in the telecom space and according to the bid condition, it will have to obtain unified licence with authorisation of access service in specified licenced service areas upon winning spectrum in the auction.

Cash-strapped Vodafone Idea has a negative net worth of Rs 80,918 crore as on March 31. Reliance Jio Infocomm and Bharti Airtel have a net worth of Rs 1.97 trillion and Rs 75,886.8 crore, respectively, as on March 31.

Brokerage CLSA wondered why would Adani bid in auction versus awaiting a direct spectrum assignment. “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,” it said in a report.

Goldman Sachs said while the group has stated it does not intend to be in the consumer mobility 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”. Globally, 5G services have been launched in three bands — 700MHz (coverage), 3.5GHz (5G coverage and capacity) and 26GHz (capacity and low latency).

“However, with Adani group ruling out offering consumer mobility services, we believe that its participation in 5G spectrum auctions will be limited to 3.5 GHz and 26 GHz bands for provision of private enterprise 5G network services,” said Credit Suisse.

The group’s foray to provide standalone 5G enterprise network solutions was a tad “unclear” given that globally, 5G enterprise use cases are still under pilot stages, it added. Credit Suisse also questioned the rationale behind bidding for 5G spectrum in auctions when the Centre has already allowed private enterprises to set up a captive non-public network by acquiring spectrum from the government for a nominal cost and without any licence fees.

Credit Suisse felt that the possibility of Adani Group foraying into consumer mobility in the future is “non-zero”. “While the Adani group has expressly denied intentions of entering the consumer mobility business, we believe that market participants may still view this as a low, distant possibility given the sector’s history. However, it would require a meaningfully higher capital commitment...” it added.

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor