The Adani Group has announced that it will participate in the next 5G spectrum auction that is scheduled to take place later this month. What this means is that Adani Group will become the fourth group after Jio, backed by Mukesh Ambani, Sunil Mittal’s Airtel and Kumar Mangalam Birla’s VI to compete for 5G bandwidth in India.
While the company has confirmed that this is not the point of setting up a telecom company, the conglomerate wants to set up a private network that can help digitize its various businesses, from airports to data centers to the energy sector.
Media statement on Adani Group’s interest in the 5G space. pic.twitter.com/iyaAmvJOf2TJuly 9, 2022
While the Adani Group’s official announcement confirms that the company is not willing to enter the telecom business at the moment.
However, the same cannot be said for the future.
Both Adani and Ambani are among the wealthiest in India and direct competitors in various sectors such as energy, media, consumer goods and more. Adani recently ventured into petrochemicals and invested heavily in new energy businesses, which include building solar panel, battery, green hydrogen and fuel cell factories. therefore, it will not be surprising if the company decides to venture into the telecommunications sector in the near future.
Consumer mobility is not a profitable business – Adani
While Jio, Airtel and VI look to add 5G connectivity to their service bouquet, Adani Group finds the telecom business highly competitive.
According to official sources, the consumer mobility business does not seem to be profitable for the company and therefore wants to stay away from it. The fact that the consumer mobility business operates on thin margins and has seen a number of companies drop out of the business can seem like a big challenge for a new entrant.
All private telecom players have struggled with low ARPU and have gradually increased the costs of their offerings. Any additions to the market will not only increase competition, but will also force existing players to lower fees to retain their customers.
However, for some strange reason, the Adani Group says it is accounting for this investment as part of Rs. Charitable pledge of 60,000 crore. If the group manages to win the bid, it will use 5G bandwidth to power connectivity with its education, health and rural development initiatives, the same network will also help the company’s for-profit entities.
We will likely have to wait for the 5G auction to take place and see how the story unfolds.