Prime Minister Nawaz Sharif has finally gave a go-ahead for next generation mobile services (3G/4G) spectrum auction to be held on April 23, 2014 to mobilise/generate over $1.5 billion non-tax revenue. Addressing a joint press conference flanked by Chairman Pakistan Telecommunication Authority (PTA) Syed Ismail Shah and Secretary IT Akhlaq Ahmad Tarar, Minister of State for Information Technology (IT) Anusha Rehman said the Prime Minister accorded approval to the final policy directive on Monday.
PTA has issued the revised Information Memorandum (IM) according to which interested operators can submit their applications and sealed bids for participation along with pre-bid deposits by April 14, 2014. The minister said that some demands of operators were met in the revised IM; however, the base prices, licence duration (of 15 years), license type and various details remained unchanged. There are three 3G (in 2100 MHz) and two 4G (in 1800 MHz) licenses to be auctioned through two-stage bidding. One 15 MHz spectrum from 850 MHz band will allotted if any new operator gets the license. According to the policy directives the base prices are set at (i) $295 million for 10MHz paired spectrum in 1.9/2.1GHz frequency band (ii) $210 million for 10MHz paired spectrum in 1800 MHz frequency band (iii) $291 million for 7.38MHz paired spectrum in 850MHz frequency band.
According to the payment options, operators can make full upfront; or minimum 50 percent upfront payment, while the remaining to be paid in 5 equal instalments in 5 years with interest rate at LIBOR + 3 percent. The minister said the inclusion of 1800MHz band was exclusively done to catalyse the deployment of 4G in Pakistan. Spectrum in 850MHz will give incentive to new entrants in Pakistan and will certainly foster competition, Anusha Rehman added.
She said the draft IM was published by PTA on February 25, 2014. Comments were solicited from stakeholders on the draft IM by March 10, 2014. Various stakeholders, including existing CMOs, submitted their comments on draft IM within due date. The comments received were mainly related to extension of date for submission of bids, quality of service & roll out obligations, some clarifications regarding payment terms, requirement of bank Guarantee and national roaming & infrastructure sharing. The advisory committee analysed the comments of the stakeholders and made some recommendations which were submitted to the Prime Minister for approval. However, the Committee has categorically advised PTA to watch the interest of the consumer in terms of Quality of Services which should be in line with the best international standards. Anusha Rehman said that Prime Minister has approved recommendations according to which the Auction will be held on April 23, 2014. A new license will be issued to the auction winner for next generation mobile services, with similar terms and conditions as of previous licensee and additional terms and conditions/amendments will be spelled out as an addendum by PTA.
The financial transactions will be in US dollar denominated and the amount can either be paid in US dollar or equivalent local currency. If the auction winner intends to pay the remaining balance amount before the end of 5 years, it would be acceptable without any pre-payment penalty. A late payment of additional fee at the rate of 2 percent per month on the instalment due or part thereof from the due date till paid shall be levied on the licensee.
The minister further said the license would be suspended/terminated in case licensee fails to make payment. To give certainty to the bidders, it was recommended that no related auction will be carried out for 18 months from the date of auction. However, for any spectrum which remains unsold in this auction, PTA retains the right to hold or dispose of the same as deemed appropriate.
The minister further said that according to PLUM Consulting UK report, this Auction could result in additional GDP valued (in net present value terms) at between Rs 380 billion and Rs 1,180 billion in the period up to 2020, besides yielding additional tax revenue for the government between Rs 23 billion and Rs 70 billion and could generate up to around 900,000 jobs in next five years.
The minister said so far the process is on track and transparency has been ensured. The government of Pakistan, PTA and consultants are very confident that the auction will receive strong support with the participation of both the existing and prospective telecom operators, she added.
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