Adani Data Networks sheds regulatory burden with spectrum deal with Airtel: Analysts

Adani Data Networks sheds regulatory burden with spectrum deal with Airtel: Analysts

The spectrum deal with Bharti Airtel marks a strategic retreat for Adani Data Networks from the telecom space, helping it cut losses and regulatory liabilities tied to idle spectrum. Analysts said telecom was never a core focus for the group, and Adani can still tap into private 5G services in the future by leasing networks from established operators.

Nearly three years after jolting the telecom sector by bidding in India’s 5G auctions, Adani is shelving its plans to build private 5G networks across its ports, airports, logistics hubs, and power plants.

In a deal announced Tuesday, Bharti Airtel and its subsidiary Bharti Hexacom said they had signed definitive agreements to acquire rights to use 400 MHz of spectrum in the 26 GHz band from Adani Enterprises-owned Adani Data Networks.

“Adani brought spectrum for captive 5G private network for industrial use cases across ports, mining, etc. However, it is not easy for non-telecom operators to deploy and maintain private networks, as it requires specific technology capabilities. Thus, with spectrum not being used and penalties related to rollout obligations, it made sense for Adani to sell its spectrum to Airtel,” said Ashwinder Sethi, partner at Analysys Mason.

Though Adani has exited direct spectrum ownership, it hasn’t shut the door entirely on telecom. The group can still pursue private 5G services in the future through spectrum leasing or network slicing arrangements with existing telecom players, Sethi added.

Another analyst, speaking on condition of anonymity, noted the capital-intensive nature of telecom and fierce market competition may have influenced Adani’s decision to step back. He added that the group is committed to other investment-heavy segments, which might have prompted it to drop telecom plans.

Adani Data Networks’ spectrum purchase was initially positioned as a strategic play to upgrade operational infrastructure through high-speed connectivity. But sources say the absence of clear commercial use cases, uncertain ROI, and a still-developing device ecosystem made spectrum deployment financially untenable.

In the 2022 auction, Adani secured 100 MHz each in Gujarat and Mumbai, and 50 MHz each in Andhra Pradesh, Rajasthan, Karnataka, and Tamil Nadu, for Rs 212 crore.

According to government sources, Adani has paid around Rs 57 crore to the Department of Telecommunications (Dot), while the remaining sum of over Rs 150 crore, excluding interest, will now be paid by Airtel to the DoT over time.

Despite holding a unified telecom licence, Adani Data Networks failed to meet the minimum rollout obligations mandated by the government, triggering penalties. DoT rules require operators to commercially launch services in at least one area within each licensed circle within the first year of spectrum acquisition.

Since last year, the DoT had repeatedly sought clarification from Adani on its failure to launch services. In response, the company informed the department it was exploring options to either surrender or trade the spectrum due to lack of viable deployment scenarios, Moneycontrol reported on January 15.