Adani Group has recently announced its plans to buy spectrum for private use termed as Captive non-public networks, that cannot provide commercial services. It attracts no entry fee or licence fee, only an application, non-refundable processing fee of Rs 50,000
“Since the Adani Group is buying the spectrum through auctions, it may be able to may be able to offer commercial services by applying for Unified Access Licence,” says Jefferies.
“Since there is a provision to get spectrum allocation for captive networks outside of the auction, we believe it might make limited economic sense for enterprises to buy spectrum via the auction for their captive needs. If an enterprise were to buy spectrum via the auction to build private networks for other enterprises, we believe the probability of such enterprises foraying into consumer network by making additional capex over time is quite high,” says Goldman Sachs in a report. This is because spectrum is usually a significant component of telcos’ overall capex. For example, since FY11, Bharti has spent $18 billion in spec”trum purchases in its India business (including M&A), which is almost 50% of the company’s total capex in its India wireless business,” adds Goldman Sachs.
“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,” said Credit Suise, in a report.
“Although the group has expressed no plans to enter the consumer mobility space, one cannot deny that there will always be a possibility. At this point, we will be closely monitoring the developments and don’t expect them to enter the consumer mobility space in near future,” said Charu Paliwal, Research Analyst, Counterpoint Research.
She further added that there is a strong possibility of Adani group disrupting the consumer mobility services, if at all they enter this space. “When Jio entered, there was a large population base not using the mobile services and its entry helped in connecting them. Jio quickly gained these virgin subscribers as well as subscribers of its competitors. However, the market is more mature now and entry of Adani will directly erode market share of operators like Jio, Airtel and Vi,” said Paliwal.
Having said that, the enterprise business of Adani will probably take a lot more time to build. A bit more clarity in terms of how many circles or what all bands Adani is probably going to bid for is keenly awaited.