Sale of 3G and 4G licenses: government optimistic about mobilising budgeted revenue of Rs 56 billion

The government is optimistic about completing the sale of the remaining two licenses (3G and 4G) within the next six months to mobilise budgeted revenue of Rs 56 billion, senior officials claimed. According to the Information Memorandum (IM) of the recently conducted auction, the government can not conduct a new auction for at least 18 months of the auction process held, however any spectrum that remains unsold in the auction can be sold anytime.
Official sources revealed to Business Recorder that the government intends to give some time to the existing telecom operators to launch their 3G/4G services in the country profitably. The government had budgeted Rs 120 billion from the auction of 3G in 2013-14 under the head of non-tax revenue which was revised to Rs 89 billion. However, later the government decided to sell 3G and 4G license in one go and Finance Minister Ishaq Dar reportedly said that the process would fetch over $1.5 billion. The auction of 3G/4G concluded on April 23, 2014, fetching non-tax revenue of over $1.11 billion where four telecom operators won 3G licenses while one also won 4G license.
Besides the licenses fee, the government also received Rs 11 billion from telecom operators as tax at the rate of 10 per cent 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. Business Recorder had reported one week before the budget that Pakistan Telecommunication Authority (PTA) conveyed to the Finance Ministry that non-tax revenue of over $500 million would be generated through the auction of two licenses that remain unsold in the recent auction in the next financial year 2014-15.
The government on May 22, 2014 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 3G license exclusively kept for new entrant with base price of $291 million remained unsold in the auction as no new telecom operator showed an interest in the process.
PTA has already started the process for next auction of the unsold spectrum. However, unlike during 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.