Billionaire Gautam Adani's group is said to be planning a surprise entry into the race to acquire telecom spectrum, pitching it directly against Mukesh Ambani's Reliance Jio and telecom czar, Sunil Bharti Mittal's Airtel, sources said.
Applications for participating in the July 26 auction of airwaves, including those capable of providing 5G telecom services with ultra-high-speed internet connectivity, closed on Friday with four applications, including Jio, Airtel, and Vodafone Idea, the three private players in the telecom sector.
The fourth applicant is Adani Group, one of the sources said, adding that the group had obtained National Long Distance (NLD) and International Long Distance (ILD) licences.
However, this could not be independently confirmed, with emails and phone calls made to the Adani Group not eliciting any response.
As per the auction timelines, ownership details of applicants are to be published on July 12 and the bidders should be known then.
During the auction, which will start on July 26, 2022, a total of 72,097.85 MHz of spectrum worth ₹4.3 lakh crore will be put on the block.
The auction will be held for spectrum in various low (600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, and 2300 MHz), mid (3300 MHz), and high (26 GHz) frequency bands.
Ambani vs Adani
Ambani and Adani, hailing from Gujarat and went on to building mega business groups, until recently did not have a direct face-off. While the former expanded from the oil and petrochemicals business into telecom and retail, the latter diversified from the ports segment to coal, energy distribution, and aviation. But increasingly, their interests are overlapping, setting what some say is the stage for a clash.
Adani has, in the recent months, set up a subsidiary for a foray into petrochemicals, a business that Ambani's father Dhirubhai began before its downstream and upstream operations.
Ambani has announced multi-billion-dollar plans for new energy business, including Giga factories for solar panels, batteries, green hydrogen, and fuel cells. Adani, who had announced plans to be the world's largest renewable energy producer by 2030, has unveiled hydrogen ambitions.
And now, if the Adani group participates in the 5G auction on July 26, it will be the first direct competition with Ambani.
The Cabinet, last month, approved 5G auctions at reserve prices recommended by the sector regulator Telecom Regulatory Authority of India (TRAI), which had recommended an 39 per cent cut in floor price for the sale of 5G spectrum for mobile services. The validity of the right to use spectrum will be 20 years.
Overall, the payment terms have been eased for bidders in the upcoming auction with no mandatory requirement to make upfront payment by the successful bidders.
Payments for spectrum can be made in 20 equal annual installments to be paid in advance at the beginning of each year, a relaxation that is expected to significantly ease cash flow requirements and lower the cost of doing business in this sector.
The bidders would be given an option to surrender the spectrum after 10 years with no future liabilities with respect to balance installments. No SUC (spectrum usage charges) will be levied for the spectrum acquired in this auction.
While the 5G spectrum in nine frequency bands will be auctioned to telecom operators, the Notice Inviting Applications, the bid-related document issued by the Telecom Department, said tech firms will be allowed to take the 5G spectrum for their captive non-public network on lease from the telecom companies.
The bid document said direct allocation of spectrum to tech companies will follow a demand study and sector regulator TRAI's recommendation on pricing and modalities of such allocation.
The decision on private networks is seen as a dampener for telcos, arguing that if independent entities are allowed to set up private captive networks with direct 5G spectrum allotment by the telecom department, the business case of TSPs (Telecom Service Providers) will get severely degraded.