Is Bharti Airtel, India’s largest and the most professionally managed telecom company, bidding without doing its homework? Has Sunil MIttal not done number crunching before bidding? Economic Times thinks so. In an article, today, the newspaper advises the company to pull out of race 900 MHz at current prices.
I do not know what purpose does the article - “Airtel should pull out of race for 900 MHz” - serve. It may only create panic among small investors or mislead ministry officials. The newspaper was earlier crying hue and cry on bid prices calling the auction “winner’s curse”.
In my article “Paid media and analysts are misleading public and the government by calling the current auction “winner’s curse”, published in TelecomTiger on February 11, I explained why the media (particularly Economic Times that seems to be working with an agenda) is wrong by calling it “winner’s curse”.
I do not want to repeat what I wrote in that article. Please read it here. I would like to take the argument further, for Delhi circle.
In 2001 auction, a price of Rs 177 crore was determined for 1800 MHz spectrum (a block of 4.4 MHz). One can consider an impact of inflation to be 15% per annum. In 13 years, its impact is six times. It means that it is as good as Rs 1,050 crore at today’s price.
If we consider 900 MHz is twice more efficient than 1800 MHz, then the price comes out to be Rs 2100 crore for 900 MHz (4.4 MHz block).
The total subscriber base of telecom subscribers in India was 25 lakh in 2001. Now Delhi boasts of about one crore subscribers.
Moreover, there is deferred payment option. In 2001, one had to make upfront payment.
My request to media is that let the market forced decide the price of spectrum. After all, this money will go for the welfare of poor people of India. There is no need to create any panic.
The media should be fair to their readers. If there is any “paid news”, it should be mentioned at the end of the story.