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Policy & Regulation
Paid media and analysts are misleading public and the government by calling the current auction “winner’s curse”, writes B K Syngal
B K Syngal |  Guest Writer |  11 Feb 2014

I strongly oppose the so called analysts’ response in media calling the existing auction “Winner’s curse”. These so called analysts have not explained the basis of their statement. These are all rhetoric statements and smell of vested interests.

Let us check the facts first. In 2001, when the customer base was only 25 lakh and tariff was Rs 6 a minute, the spectrum contributed only 80 paise per minute to the tariff at the best. The same spectrum is being used even now when the customer base is anything between 50 and 60 crores. This is nearly 200 times of the then customer base in 2001.

Therefore, the spectrum cost that has emerged today is approximately 20 times that of the 2001 cost. However, the customer base has gone up by 240 times.

Therefore, if the operators pass on the cost of spectrum to subscribers, increase in tariff will not be more than a few paise.

As far as debt of the industry is concerned, it may be noted that debt of two big operators – Bharti Airtel and Vodafone – is not due to their spectrum cost or investments in India. Bharti Airtel’s debt is mainly due to its expansion in Africa through Zen acquisition. Vodafone paid huge amount to Hutch to buy its equity.

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