License renewal: $238.6 million received from China Mobile

The government received $238.6 million (Rs 37.16 billion) as non-tax revenue from China Mobile (CM Pak) cellular company as license renewal fee.

The license renewal proceeds have been deposited in Federal Consolidated Fund (FCF), said Pakistan Telecommunication Authority (PTA).

Telenor Pakistan and Jazz had deposited $224.6 million (Rs 35.262 billion) each (half of the amount as per court direction) as their license renewal fee in September 2019.

The recent deposits from the three cellular mobile operators against license renewal fee to the tune of more than Rs 107 billion would provide support to the national exchequer as well as economy. This also shows the positive contribution by telecom sector and efforts of PTA, stated PTA on Twitter.

The government had approved renewal of licenses of two mobile operators, ie, Jazz and Telenor Pakistan at around $450 million each while the third operator - CM Pak has to pay $470 million.

Due to stay orders given by the Islamabad High Court, the collection of the renewal fee from two telecom companies which was budgeted in previous fiscal year had been delayed.

Cellular licenses were issued by the 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 license 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 licenses were due for renewal on May 25, 2019 and October 22, 2019 respectively. In 2014, the government of Pakistan renewed the license of Ufone at $291 million.

On August 21, Islamabad High Court (IHC) directed Telenor and Jazz for depositing 50 percent of license renewal fee i.e. around Rs 36 billion each in two weeks as guarantee.

The operators disagreed to the PTA decision on fixing license renewal fee. The operators had also requested for grant of stay order to avoid service disruption in the country after August 21, 2019 - the date fixed by PTA for renewal of licenses.

The court had directed both the operators to deposit half of the amount, ie, 50 percent as guarantee till the final decision on the appeal of both cellular operators.

The PTA had rejected mobile operators' apprehensions relating to the price of license renewal and passed an order while fixing the fee for license renewal at $39.5 million per MHz for frequency spectrum of 900 MHz and $29.5 million per MHz for frequency spectrum of 1800 MHz. However, Jazz and Telenor went into appeal against the PTA decision.

The PTA had directed operators to pay their license fee before August 21, 2019 or their licenses will be termed expired and they will not be allowed to provide telecom services after the deadline.

Mobile licenses of Telenor and Jazz expired on May 26, 2019. The PTA had passed a verdict relating to license renewal of Jazz and Telenor, details for which are as following: fee for renewal of license shall be US $ 39.5 million per MHz for frequency spectrum of 900 MHz and US $ 29.5 million per MHz for frequency spectrum of 1800 MHz; licenses will be renewed with effect from 26th May, 2019 for a period of further fifteen (15) years, on a technology-neutral basis, subject to the payment of renewal fee to be calculated in accordance with per MHz price as mentioned above, the payment terms for the renewal fee shall be 100% upfront or 50 percent upfront with the remaining 50% in five (5) equal annual installments on LIBOR plus 3 , the payment can be made in US dollar or in equivalent Pak rupees calculated at the market exchange rate at the time of payment, the upfront payment, as given above, shall be paid on or before 21-08-2019.

In case of non-payment of upfront fee, the license will stand expired, the terms and conditions relating to enhanced quality of service and coverage of network shall be finalized in line with applicable regulatory practice and 2015 Policy after consultation with the licensee on or before 21-08-2019, in case, the licensee opts for non-renewal of its license, it shall pay a fee on pro-rata basis of the renewal fee along with all other applicable fee and other charges of the license commencing from 26-05-2019 till the date of withdrawal/vacation of the radio frequency spectrum.