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NEW DELHI : Adani Data Networks, the surprise contender for 5G airwaves, has put in a paltry 100 crore as earnest money to participate in 5G spectrum auctions, suggesting the company may only bid for airwaves in a few circles for enterprise or captive use, industry experts said.

The earnest money will allow the Gautam Adani company to buy airwaves worth about 650-700 crore, industry executives said. It is unlikely to enter the consumer mobility business, at least for now, they added.

Aerial warfare
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Aerial warfare

The development is a major relief for the three private-sector telcos that had just emerged from a brutal price war and regulatory upheavals to a period of relative calm. Speculation about Adani entering the consumer wireless business had alarmed shareholders of rival telcos, bringing back memories of the assault Mukesh Ambani launched six years ago that forced a crowded telecom market to consolidate and crippled the balance sheets of the ones that survived.

“Adani is out of the competition. They cannot be expected to buy 5G spectrum in the 3.5 GHz band at all, which means no consumer business," a top industry executive said, asking not to be named.

In contrast to fellow billionaire Adani, Ambani’s Reliance Jio Infocomm Ltd put in a whopping 14,000 crore as earnest money. Bharti Airtel deposited a more modest 5,500 crore, and Vodafone Idea Ltd, the weakest of the three telcos, deposited 2,200 crore.

“With 14,000 crore, they can buy 1.4 trillion worth of spectrum, one-third of all the spectrum put up for auction. This is clearly a statement, showing potential rivals what is needed to enter the Indian telecom sector," a senior industry executive said on the condition of anonymity.

Industry experts said this indicated possible spectrum purchases in the 3.5GHz and 26GHz bands for deploying 5G by the three carriers.

A senior telecom analyst said Adani Group’s strategy is likely to be focused on offering captive and enterprise services that do not require a lot of mid-band spectrum or capital investment. “We can expect only enterprise play and airwaves for captive services, as they have stated," he added, asking not to be named.

On the other hand, Jio’s deposit indicates a massive spectrum purchase plan. Experts, however, said the carrier does not need to buy airwaves in 4G or other bands, having spent over 57,000 crore in the previous auctions for 4G frequencies.

According to estimates from a brokerage house, Reliance Jio is expected to buy airwaves worth 40,000-50,000 crore for 5G airwaves in 3.5GHz and 26GHz bands. “With Adani out of the consumer play, they can even go for 150 units in 3.5MHz without getting into a bidding war with either Airtel or Vodafone Idea," the industry executive cited earlier said.

Another senior executive said the strategy would be to keep everyone guessing which bands Jio will bid for, but he added that high deposits do not mean that Jio will spend it all during bidding. “They can buy anything doesn’t mean that they will buy everything. This is just to keep their options open in case a new entrant indeed enters the market," the executive said, asking not to be named.

Jio’s aggressive stance indicated spectrum buys across all bands, including the pricier 700MHz band, which may be used for building capacity for the 5G network. “The 700MHz band has to have some business case or a clear roadmap for return on investment which is not the case at such pricing levels. I don’t think any telco will go for 700MHz, even if they have submitted a very high earnest money," another analyst said, seeking anonymity.

In the case of Bharti Airtel, the carrier can buy airwaves worth 50,000 crore, but analysts estimate that the No. 2 carrier may spend about 36,000 crore for securing about 50-80MHz of 5G spectrum in the 3.5GHz band and taking about 500-600MHz in the 26GHz band, besides adding to spectrum in the 900MHz and 1800MHz bands. “They will take a lot of 26GHz solely for the purpose of reduction in the spectrum usage charge," said a senior analyst, asking not to be named.

With a deposit of 2,200 crore, Voda Idea can purchase airwaves worth about 25,000 crore, but it may not have the financial might to bid for a lot of airwaves, some experts said .

Queries sent to Adani Group, Reliance Jio, Bharti Airtel and Vodadone Idea did not elicit a response.

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