Modi government seeks clarification from Adani on 5G services rollout
What's the story
The Department of Telecommunications (DoT) has sought an explanation from Adani Group over its delayed 5G services rollout.
The business conglomerate did not meet the minimum rollout obligations (MRO) for launching these advanced services, even after getting a unified license to offer telecom and internet services, more than two years ago.
The details were revealed to Moneycontrol by sources familiar with the matter.
Launch ambiguity
Adani's 5G launch date remains uncertain
Adani Data Networks, a subsidiary of Adani Enterprises, is yet to announce a date for the launch of its 5G services.
This uncertainty comes even after several notices from the government for their non-compliance with MRO.
An insider from the Adani Group disclosed that they are contemplating the surrender of their 5G spectrum in the 26GHz band, which they had acquired during the 2022 auctions.
Spectrum surrender
Adani Group mulls surrendering 5G spectrum
The insider further revealed that the company has not officially announced its decision to return the spectrum. However, it has informed DoT officials about its plans.
The group believes the deployment of captive private networks for its businesses across airports, ports, power generation, as well as logistics is not commercially viable.
Regulatory implications
Auction rules and penalties for non-compliance
As per the auction rules, operators using 26GHz band have to start commercial services in the licensed service area within a year.
Failure to comply with rollout obligations leads to penalties starting at ₹1 lakh per week for the first 13 weeks, increasing to ₹2 lakh/week for the next 13 weeks. A show-cause notice is also issued before penalties are imposed.
Despite these rules, spectrum can only be surrendered after 10 years while trading is allowed after two years.
Spectrum strategy
Adani's 5G spectrum acquisition and intended use
In the 2022 5G spectrum auctions, Adani Data Networks purchased 400MHz in the 26GHz band for ₹212 crore.
It received allocations in Gujarat, Mumbai, Andhra Pradesh, Karnataka, Rajasthan, and Tamil Nadu.
Although it received a unified license to provide telecom and internet services with the spectrum purchase, the company had said it was mainly for building captive private networks.
Market hurdles
Challenges and options for Adani
Sources indicate that return on investment-related challenges have rendered the spectrum's commercial deployment unviable for Adani at this stage.
"The absence of immediate use cases, minimal penalties for non-compliance, and the slow-evolving ecosystem for private 5G have left the company with options to either trade or surrender the spectrum," an industry source told Moneycontrol.
High initial costs, vague use cases, nascent ecosystem, and lack of skilled workforce are among factors hampering adoption in India.