ISLAMABAD: The country is likely to face a shortfall of around Rs32 billion in non-tax revenue from 5G licenses, budgeted for the outgoing fiscal year 2023-24, due to non-materialization of the spectrum auction owing to economic and political challenges, well-placed sources revealed to Business Recorder.
The government budgeted Rs72.597 billion from 4G/5G licenses under the head of non-tax revenue for the current fiscal year 2023-24 against Rs50 billion budgeted for last fiscal year which was later revised upward to Rs74 billion.
In response to Business Recorder questions PTA responded; “License renewal fees from cellular mobile operators are receivable in instalments as per license terms and conditions. Pakistan Telecommunication Authority (PTA) has so far received Rs30.94 billion against its budgeted amount of Rs40.90 billion for the financial year 2023-24.” However, the Authority did not mention the remaining around Rs32 billion shown in the budget documents.
Sources revealed that serious efforts were made during the tenure of Pakistan Tehreek-e-Insaf (PTI), coalition/Pakistan Democratic Movement (PDM) and caretaker governments to initiate the process and launch 5G services in the country, however, political environment and economic challenges delayed the process.
Sources further said that sufficient spectrum was available to be offered for any future spectrum auction for NGMS in Pakistan; however, Cellular Mobile Operators (CMOs) took a cautious approach due to economic challenges and uncertainty in the market regarding the launch of 5G.
Other impediments include low handset and Optic Fibre Cable (OFC) penetration, low Average Revenue Per User (ARPU), and rising Operating Expenses (OPEX) coupled with high taxation to launch 5G services in the country.
International projections suggest that by the end of 2026, 5G will attract 3.5 billion subscriptions, thereby generating approximately 45 percent of the world’s total mobile traffic data.
However, sources said that completion of 5G auction seems a challenge in the current calendar year and the government would require approximately eight to ten months in line with the Public Procurement Regulatory Authority (PPRA) after issuance of the policy directive to complete the process of the 5G launch in the country.
The process kicks off with the government communicating to all stakeholders that it is going to launch 5G and would prepare a draft policy directive.
The policy would be approved first by the Economic Coordination Committee of the Cabinet (ECC) and then by the federal Cabinet to be chaired by the Prime Minister. The approved policy would be shared with the PTA and the Frequency Allocation Board (FAB). The FAB would require specifying frequency bands, while the PTA would conduct the required process.
After getting the policy directive for auction of 5G from the Ministry of Information Technology and Telecommunication, PTA would issue an RFP (Request for Proposal) for hiring of consultancy services for the auction. It would take two weeks while an additional week would be required for advertisement and process through embassies in countries such as the US, the UK etc.
As per the PPRA rules, it would require 30 days to complete the process while in reaching this point a total of two months would be required.
After the submission of bids, two weeks would be needed for technical evaluation and later opening of financial bids. Further, 10 days would be required if any entity or person has an objection and then an agreement would be signed with the qualified consultant.
The consultant(s) hired for the purpose will be responsible to procure the auction in a transparent, professional and profitable manner.
The consultant would require at least two months to complete the report and submit to the auction advisory committee. After approval, it would be sent to the ECC and then to the cabinet where approval would be granted for benchmarks, prices, bands etc and over six months would be required (from starting date), to reach this point.
The PTA, after this, would publish Information Memorandum (IM) and it requires 45 days as per the rules which may take total time to over eight months. Later, auction would be held and spectrum award and payment would take another 30 days. All the deadlines given are an ideal situation where no objection or court intervention is included, the official added.
Copyright Business Recorder, 2024
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