Auctioning of 3G licenses may be approved

The Cabinet today (Wednesday) is likely to approve open auctioning of 3G licenses for upgradation of telecom services in the country by offering 20 MHz to 35 MHz frequency to the five telecom players in the market that would enable the government to generate between $749 million to $1.2 billion revenue, it is learnt.
Sources told Business Recorder that the Cabinet meeting to be presided over by Prime Minister Syed Yousaf Raza Gilani may approve some amount for circular debt payment. Two separate meetings, one on power sector and the other on auctioning of 3G licenses have been held in the finance ministry to firm up proposals for the Cabinet meeting.
The meeting on 3G licenses chaired by Finance Minister Dr Abdul Hafeez Sheikh explored various options for auctioning licenses by Pakistan Telecommunication Authority (PTA). An official said that a final decision about auctioning the number of licenses, mode of auction as well as offering of frequency slab would be taken by the Cabinet. However, the meeting chaired by the finance minister discussed two options and decided to take them to the Cabinet for approval to go for auctioning of excess frequency to the mobile operators.
The first meeting said to have discussed two options - the one to offer 10 MHz frequency to the mobile operators for expected revenue generation from 420 million dollars minimum to 800 million dollars maximum and the second option to go for bidding of 20 MHz to 35 MHz frequency for minimum revenue generation 749 million dollars and maximum 1.2 billion dollars.
The government had also planned auctioning of 3G licenses last year as well and estimated Rs 50 billion in the budget on this account but was not able to materialise the proposal. This year again an amount of Rs 75 billion has been estimated in the budget from the sale of 3G licenses.
The meeting was informed that Mobilink, Ufone, Telenor, Warid and Zong are potential candidates for the bidding to buy excess frequency for running 3G network. The meeting decided that access frequency would be bridged by 2013 and the Secretary Privatisation was of the opinion that foreign companies should also be invited to participate in the bidding for transparency and better price. An official said the original proposal was to issue two or three 3G licenses but the final decision about the mode of auction whether to give licenses on fixed price or to go for open auction will be taken. He said there is a possibility of open auction.