Adani’s 5G bet in limbo; after penalties from DoT, may surrender spectrum

Adani Data Networks had bought 400 Mhz spectrum in the 26 Ghz band for Rs 212 crore in the auctions held in July 2022, which was the first time 5G spectrum was auctioned. It currently holds 100 Mhz each in Gujarat and Mumbai and 50 Mhz each in Tamil Nadu, Karnataka, Andhra Pradesh and Rajasthan.

At the time, the company had said that it was purchasing the airwaves to provide private network solutions at a number of its business verticals such as airports and ports, while clarifying that it did not intend to be in the “consumer mobility space”.

A source aware of Adani’s telecom plans also said that the company will not purchase any spectrum in the upcoming auctions, effectively signalling that the company could drop its telecom ambitions altogether. In the recent spectrum auctions, which were held last June, the Adani Group did not participate.

It is currently unclear whether the DoT would cancel Adani’s licence.

Queries sent to the Adani Group remained unanswered until publication.

During the 2022 spectrum auctions, the government had announced a proposal for tech companies and other enterprises to acquire spectrum directly from it to test and build industry 4.0 applications, such as machine-to-machine communications, the Internet of Things (IoT), artificial intelligence (AI), etc. These networks are called private captive networks, as they are set up to serve a specific organisation, and not the general population.

As per the minimum rollout obligations for companies who acquired spectrum in 2022, for those who bought airwaves in the 26 GHz frequency band, they would have to launch commercial services anywhere in the service area within a year.

Penalties of Rs 1 lakh per week for the first 13 weeks, followed by Rs 2 lakh per week for the next 13 weeks, will be levied on the companies that do not meet the obligation. A show cause notice will be issued to the telcos concerned before penalties are levied, the conditions state.

Industry experts said that private 5G networks have so far found no takers due to several operational challenges, and a lack of use cases that could make economic sense.

“First of all, the cost of acquiring spectrum is very high, which cuts out many smaller firms from acquiring it and offering private 5G services. As a result, enough use cases are not coming up. In Adani’s case, only using airwaves for its group companies might not have made much economic sense,” a senior industry executive said, on condition of anonymity.