Highlight
- Adani Group plans surprise entry to acquire telecom spectrum
- This can pit Adani directly against Jio and Airtel
- Adani has also set up a subsidiary in recent months to enter petrochemicals
Billionaire Gautam Adani’s conglomerate is planning a surprise entry in the race to acquire telecom spectrum, which will pit it directly against Mukesh Ambani’s Reliance Jio and telecom giant Sunil Bharti Mittal’s Airtel, sources said. Applications to participate in the July 26 auction of airwaves, including fifth generation or 5G telecommunications services capable of providing ultra-high-speed internet connectivity, closed on Friday with at least four applications. Jio, Airtel and Vodafone Idea – the three private players in the telecom sector – applied, said three sources with knowledge of the matter.
The fourth applicant is Adani Group, one of the sources said, adding that the group had recently obtained National Long Distance (NLD) and International Long Distance (ILD) licenses. But this could not be independently confirmed. Emails and phone calls to Adani Group did not elicit any response.
As of the auction deadline, the applicants’ ownership details are to be published on July 12 and bidders should know by then. Total 72,097.
85 MHz spectrum worth at least Rs 4.3 lakh crore will be put on the block during the auction that begins on July 26, 2022. The auction will be conducted for spectrum in different lows (600 MHz, 700 MHz, 800 MHz). 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz), mid (3300 MHz) and high (26 GHz) frequency bands.
The Ambanis and Adanis, who hail from Gujarat and have formed large business conglomerates, did not face-to-face until recently. While the former expanded from the oil and petrochemical business into telecommunications and retail, the latter expanded from the port segment to coal, power distribution and aviation. But increasingly, their interests are becoming overlapping, which some say is the stage for conflict.
Adani has set up a subsidiary in recent months to foray into petrochemicals – a business that was started by Ambani’s father Dhirubhai before operating downstream and upstream. Ambani has also announced multi-billion dollar plans for new energy business including giga factories for solar panels, batteries, green hydrogen and fuel cells. Adani, which had earlier announced plans to become the world’s largest renewable energy producer by 2030, has also revealed hydrogen ambitions.
And now, if the Adani Group participates in the 5G auction on July 26, it will be the first direct competition with the Ambanis. The cabinet last month approved 5G auctions at the reserve price recommended by sector regulator Telecom Regulatory Authority of India (TRAI). The regulator had recommended a cut of around 39 per cent in the minimum price for sale of 5G spectrum for mobile services. The right to use spectrum will have a validity of 20 years.
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Overall, the payment terms have been relaxed for the bidders in the upcoming auction. For the first time, there is no mandatory requirement to make advance payment by the successful bidders. Payment for spectrum can be paid in advance in 20 equal annual installments at the beginning of each year, a discount that is expected to significantly reduce cash flow requirements and the cost of doing business in the sector. The bidders will be given an option to surrender the spectrum after 10 years without any future liabilities in respect of the remaining installments.
No SUC (Spectrum Usage Charge) will be levied for the spectrum received in this auction.
While 5G spectrum in nine frequency bands will be auctioned to telecom operators, the notice inviting applications – a bidding-related document issued by the DoT – states that tech firms will be allowed to take 5G spectrum for their private non-public Will be Network on lease from telecommunications companies. The bid document said that the direct allotment of spectrum to tech companies would follow the recommendations of sector regulator TRAI on aspects such as demand studies and the modalities of such allocation.
The decision on private networks is seen as a disappointment to telecom companies, who were arguing that if independent entities are allowed to set up private captive networks with direct 5G spectrum allocation by the DoT, then TSP (Telecom Service Provider) will have a business case. become seriously impaired.
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