Pakistan Telecommunication Authority (PTA) has conveyed to the Finance Ministry that non-tax revenue of over $500 million would be generated through the auction of two remaining unsold licenses in 2014-15, it is learnt. The government on May 22 awarded 3G/4G licenses to the successful bidders of the auction process held on April 23.
However one license of 4G with base price of $210 million and another license exclusively kept for new entrant with a base price of $291 million remained unsold in the auction as no new telecom operator showed any interest in the process. According to the Information Memorandum (IM) of the auction, the government can not conduct new auction before 18 months after the first auction process; however any spectrum that remained unsold in a previous auction can be auctioned anytime.
According to the official sources, PTA has started the process of the next auction where the spectrum remained unsold. However, this time the process would not require much time as unlike the previous process no international consultant would be hired for the auction. PTA has already started to prepare its own software for the auction, said officials, adding that the amount is likely to be budgeted in 2014-15.
The government had budgeted $1.2 billion from the 3G spectrum auction in the budget 2013-14, however later it decided to auction 3G and 4G in one go and the Finance Minister reportedly said that the process would fetch over $1.5 billion. The auction of 3G/4G concluded last month, fetching a non-tax revenue of over $1.11 billion where four telecom operators won 3G licenses while one operator emerged as the winner of 4G licence as well.
The country raised $903 million from 3G spectrum auction and $210 million from the 4G spectrum. According to the IM for auction, telecom operators had a choice to pay either 100% upfront or 50% of the winning bid amount within 30 days and remaining 50% with mark-up @ Libor + 3% in equal annual instalments over a period of 5 years. Zong and Mobilink paid the whole amount ie $516 million (3G and 4G) and $300.9 million for 3G licence, respectively, while Ufone and Telenor opted to pay 50 percent of the winning bid amount of 3G licenses and thus the government has already received over $964 million (80 percent) from the telecom operators against 3G/4G licenses fee.
Besides, the licenses fee the government has also received Rs 11 billion from telecom operators as tax at the rate of 10 percent advance tax under section 236A of the Income Tax Ordinance 2001 on the auction sale price. The previous government budgeted Rs 50 billion in 2010-11, Rs 75 billion in 2011-12 and Rs 79 billion in 2012-13 from the spectrum auction, however the spectrum could not be auctioned.
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