ISLAMABAD: The government raised more than $1.1 billion in its long-delayed auction of next-generation telecommunications licences, snapped up by the country’s four existing mobile network providers. The government sold off four licences to provide 3G services, which allow broadband-speed internet on mobile phones, and one for superfast 4G connections.
The total is close to the $1.2 billion estimated for the sale in the federal budget for 2013-14 but below a bullish prediction of $2 billion made by Finance Minister Ishaq Dar in January. Pakistan has more than 132 million mobile phone subscribers but has lagged behind its neighbours in setting up 3G, which is now the norm in many countries.
The auction for 3G/4G spectrum fetched a non-tax revenue of over $1.11 billion with all the four qualified bidders winning 3G licenses. One of them emerged as the winner of 4G license as well. The government raised $903 million from 3G spectrum auction and $210 million from the 4G spectrum.
However, one license of 4G with a base price of $210 million and another license exclusively kept for a new entrant with a base price of $291 million remained unsold, Finance Minister Ishaq Dar said while addressing press conference. He was flanked by Chairman Pakistan Telecommunication Authority (PTA) Ismail Shah, State Minister for Information Technology Anusha Rehman and Minister for Science and Technology Zahid Hamid.
Dar said that all offers worth Rs111 billion including that of one segment of 1800 MHz frequency band had been received. He said the government had with it one more segment in 1800 MHz band and one license reserved for new entrants, which would fetch additional money.
The Finance Minister said that Rs50 billion was budgeted in 2010, Rs75 billion in 2011 and Rs79 billion in 2012; however as a result of professional work, the incumbent government increased it to Rs120 billion in the budget for 2013-14. He further said that people were being deprived of latest technologies for the last four years. However, the PML-N government fulfilled its promise and completed the process before the FY15 budget.
Dar said each successful bidder would have to pay either 100 percent upfront or 50 percent of the winning bid amount within 30 days and the remaining 50 percent with a mark-up at Libor + 3 percent in equal annual instalments over a period of 5 years. The PTA chairman announced that Zong Mobile won 10 MHz of 3G and 4G each, Mobilink 10 MHz of 3G, Telenor and Ufone won 5MHz of 3G each. He explained that Ufone had bid for 15 MHz in 3G and 10 MHz in 4G; however, it could win 5 MHz of 3G and according to the Information Memorandum (IM) it was mandatory for a bidder to win 10 MHz of 3G to qualify for 4G. Therefore, the bidder won 5MHz of 3G and the 4G spectrum remained unsold. Further, Zong Mobile, bid 10 MHz each for 3G and 4G and won respectively. Mobilink and Telenor did not bid for 4G, however, they won 10 MHz and 5MHz of 3G, respectively.
It is to be noted that even Afghanistan, Pakistan’s far less developed western neighbour with a weaker economy and more fragile state, has had the technology since 2012. The successful bidders for 3G services were Ufone, Telenor, Mobilink and Zong, all established players in the Pakistani mobile market. Zong also won one of two licences available for 4G services. The second will be auctioned later.
