A unit of billionaire Gautam Adani's flagship Adani Enterprise Ltd, a subsidiary of Reliance group's digital arm as well as Bharti Airtel and Vodafone Idea have applied to participate in the July 26 auction of 5G spectrum, the government said Tuesday.
Adani Data Networks Ltd -- in which AEL's equity holding is 100 per cent -- got initial approval for grant of unified licence with authorisation of ILD, NLD and ISP-B for Gujarat circle, just days before the July 8 deadline for applying for participation in the 5G auction.
Adani Data Networks showed a net worth of Rs 248.35 crore in its application to participate in the auction at the close of application on July 8, according to the information posted by the Department of Telecommunications (DoT).
AEL's Rs 4,730.66 crore net worth will be counted for calculating the net worth towards the eligibility for bidding.
Reliance Jio Infocomm Ltd, a subsidiary of Jio Platforms Ltd - the unit that holds the digital assets of Reliance - also applied for participation in the spectrum bidding process. It has shown a net worth of Rs 1,97,790 crore as on March 31, 2022.
As per the information posted by DoT about the applicants, Birla Group held a 27.38 per cent stake in Vodafone Idea and UK's Vodafone 47.61 per cent.
Vodafone Idea has negative net worth of Rs 80,918 crore as on March, 2022, while the paid-up capital is at Rs 32,119 crore.
Bharti Airtel's net worth stood at Rs 75,886.8 crore as on March 31, 2022.
"...applications have been received from the...applicants for participation in the 2022 auction for rights to use spectrum in 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300 MHz and 26 GHz Bands," the Department of Telecom (DoT) said.
It listed out Adani Data Networks, Reliance Jio Infocomm, Vodafone Idea and Bharti Airtel as the four applicants.
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 Reliance Jio and Bharti Airtel looking to strengthen their hold in the industry.
Adani Group on Saturday said it is in the race to acquire spectrum, which it said will be used to create a private network to support its businesses from airports to power as well as data centres.
A total of 72,097.85 MHz of spectrum worth at least Rs 4.3 lakh crore will be put on the block during the auction.
The auction will be held for spectrum in various low (600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz), mid (3300 MHz) and high (26 GHz) frequency bands.
On Monday, BofA Securities in a note on the Adani Group's plans to bid in 5G auctions said: "We consider this news flow negative for incumbent telcos as it increases competition in upcoming auction bidding as well as in the long-term opportunity to target the enterprise space."
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 that 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.
"Whereas acquiring a 100 MHz block on a pan-India basis in 3.5 GHz band is likely to cost Rs 317 billion (Rs 31,700 crore) and 500 MHz in 26 GHz band is likely to cost another Rs 35 billion (Rs 3,500 crore). Of course, these come with comfortable payment terms," it said.
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.
