Renewal of cellular mobile licences policy for 15 years approved

The federal government on Tuesday approved renewal of cellular mobile licences policy for 15 years that would generate estimated revenue of $1.37 billion. However, senior officials in the Ministry of Information Technology and Telecomm-unication described the policy as conservative because it does not assign additional optimal spectrum, despite demand in the market, which could have generated additional revenue of $300 million.
The government has approved to renew licences of two mobile operators at $450 million each while the third operator would have to pay $470 million, sources added.
Prime Minister Imran Khan presided over the cabinet meeting here on Tuesday where the matter pertaining to mobile licence renewal was discussed. The cabinet approved the renewal policy and expected revenue of $1.37 billion from this process.
The federal cabinet on April 16, 2019 constituted a five-member committee for further deliberations on the policy for renewal of cellular mobile licenses.
Pakistan Telecommunication Authority (PTA) had submitted a report to cabinet for policy renewal as was directed by the Prime Minister. These are multimillion dollars transactions and it was felt that there is need for further deliberations.
PM Khan had constituted a five-member committee comprising Minister for Information Technology and Telecommunic-ation Dr Khalid Maqbool Siddiqui, former Finance Minister Asad Umar (later replaced with Advisor to Prime Minister on Finance Hafeez Sheikh), State Minister for Revenue Hammad Azhar, Advisor to Prime Minister Abdul Razzak Dawood and Federal Minister for Privatisation Mian Mohammad Soomro for reviewing PTA report.
Cellular licences were issued by PTA to two new cellular mobile operators i.e. M/s Telenor Pakistan and M/s Warid Telecom on May 26, 2004 for a period of 15 years, under the Mobile Cellular Policy, 2004, on payment of $291 million after auction.
Cellular licence of M/s Paktel Limited, now China Mobile Pakistan (Zong), was also renewed by PTA under the 2004 Policy on October 23, 2004 for a period of 15 years on payment of $ 291 million. These licences are now due for renewal on May 25, 2019 and October 22, 2019 respectively. In 2014, the government of Pakistan renewed the licence of the state-owned entity, Ufone, at $291 million through interest-free payment instalment in order to maintain a level playing field. Telenor Group had recommended that licence of Telenor Pakistan and other operators be renewed under the same terms and conditions.
M/s Veon, one of the largest foreign investors in Pakistan, has sought predictable and transparent investment climate and licence renewal price of not more than $291 million.
The Sections 8(1), 8(2)(a) and 5(2)(a) of the Pakistan Telecommuni-cation (Re-Organisation) Act, 1996 provide the policy framework for determination of terms and conditions of licences.
The Section 8(1) states that the federal government may, as and when it considers necessary, issue policy directives to the Authority, not inconsistent with the provisions of the Act, on matters relating to telecommunication policy referred to in sub-section (2), and the Authority must comply with such directives. The matters on which the federal government may issue policy directives shall be; the number and terms of the licences to be granted in respect of telecommunication systems which are public switched networks, telecommunication services over public switched networks and international telecommunication services, and the conditions on which those licences should be granted.
The Ministry of Telecommunication had submitted the following proposals to the federal government for consideration: (i) the renewal price for the right to use frequency spectrum included in the licences being renewed shall be in accordance with per MHz price benchmarks from frequency spectrum auctions of 2016 and 2017 i.e. per MHz price for frequency spectrum in 900 MHz and 1800 MHz shall be $ 39.5 million and $29.5 million respectively; (ii) the tenure of the renewed licences shall continue to be 15 years; (iii) payment term shall be 100 per cent upfront or 50 per cent upfront with remaining 50 per cent on five equal instalments on Libor+3 per cent; (iv) licences renewed under this policy directive shall be technology neutral in line with existing GoP policies; (v) provision of spectrum trading/ sharing as per the approved regulatory framework for such sharing/ trading will be incorporated in the renewed licences by PTA;(vi) terms and conditions relating to coverage, enhanced Quality of Service (QoS), etc, under the renewed licences, shall be incorporated by PTA in line with Telecom Policy 2015 and as per applicable regulatory practices; (vii) Frequency Allocation Board will provide options in lieu of cross border interfered spectrum to CMPak (Zong) in 900 MHz band included in its current licences. In case of non-acceptance of proposed options, renewal of CM Pak licence and its associated spectrum (2x 13.6 MHz) shall be dealt in accordance with S. No. 4 (v) of 42nd Board's meeting decision (i.e. without any compensation in terms of additional frequency assignments.