Last Updated on Jul 12, 2022 by Aradhana Gotur
Adani Group’s entry into the 5G telecom spectrum auction dragged Bharti Airtel shares. On Monday, Bharti Airtel opened downside and hit an intraday low of Rs. 661.15 apiece on NSE, translating into a ~5% dip from its Friday close.
Experts believe that Adani Group’s entry into the 5G spectrum auction will result in a considerable loss of corporate business for telecom companies.
Adani Group’s plans
Although Adani Group hasn’t indicated foraying into the telecom space, its entry into the 5G auction looks like the conglomerate would have its own telecom infrastructure and not take services of other telecom companies after the 5G rollout.
As per Ravi Singhal, CEO at GCL Securities, Adani Group’s entry into the 5G spectrum auction is negative news for telecom players like Bharti Airtel and Reliance Jio as they would lose considerable corporate business even if Adani doesn’t foray into the telecom business. Various IT companies have also applied for the 5G spectrum auction in want of personal telecom infrastructure.
Adani Group clarified that its intention to enter the telecom business is to use the 5G spectrum and is not aimed at consumer communication services if awarded for private network solutions. Thus, Adani’s move is expected to heighten the competition, especially in the enterprise services segment.
Bharti Airtel
Punit Patni, Equity Research Analyst, Swastika Investmart, is optimistic about Bharti Airtel as its EBITDA margins are expected to rise in line with tariff hikes. This would make the company better equipped to generate free cash flows and deleverage its balance sheet. Airtel’s financial position also remains strong, and the outlay in the upcoming 5G auctions is expected to be reasonable.
