ISLAMABAD: The government has set base prices of $31 million and $29 million for the spectrum auction in 1,800 MHz and 2,100 MHz bands, respectively, for Pakistan and $0.87 million for Azad Jammu & Kashmir (AJK) and Gilgit Baltistan (GB), which will be held by end September 2021.

The policy directive for the auction of next generation mobile services (NGMS), copy of which is available with Business Recorder, revealed that additionally, 2x10 MHz spectrum earmarked by Frequency Allocation Board (FAB) for Special Communication Organization (SCO) in both 1,800 and 2,100 MHz bands is approved for assignment to SCO.

The policy directive prepared for auction in Pakistan states that the federal government in exercise of powers conferred under Section 8(2) of the Pakistan Telecommunication Authority (Re-organization) Act 1996 (Amended 2006), hereby, issues the following policy directive for auctioning the available radio frequency spectrum in 1,800 MHz and 2,100 MHz bands for compliance by the Pakistan Telecommunication Authority (PTA): (i) A transparent, competitive process shall be formulated by the PTA for auctioning 12.8 MHz paired spectrum in the 1800 MHz band and 15 MHz paired spectrum in the 2100 MHz; (b) PTA shall issue an Information Memorandum specifying therein the detailed procedure of the auction including eligibility criteria and steps for participating in the auction process. The auction shall accordingly be conducted by PTA in minimum possible time after issuance of Policy Directive by the federal government; (c) the spectrum assignment shall be "technology Neutral" and usable for all existing and upcoming advanced generations/technologies, within the applicable policy framework of the government; (d) to ensure optimal utilisation of radio frequency spectrum, PTA shall endeavor to provide each CMO with the opportunity to acquire such additional spectrum that will enable it to hold, in total, spectrum in multiples of standard 5MHz paired spectrum blocks; (e) post spectrum auction, all CMOs shall be required, within a reasonable time as determined by the PTA to comply with the rationalisation plan as may be issued by the PTA in consultation with FAB to ensure the optimal utilisation of contagious spectrum holdings in 1800 MHz band; (f) the base price for 2x1 MHz (1 MHz paired) spectrum in 1800 MHz is $31 million, while the base price for 2x1 MHz (1 MHz paired) spectrum in 2,100 MHz is $29 million respectively; (g) existing CMOs and new entrants are eligible to participate in this auction subject to a spectrum cap of 40 percent in complete 1800 MHz band; (h) transactions related to spectrum auction i.e. spectrum fee and related markup shall be US dollar denominated, however, the amount shall be paid either in US dollar or in equivalent Pak rupees.

For the purpose of conversion, National Bank of Pakistan TT selling rate prevailing on the date preceding the date of payment shall be used; (i) Payment terms shall be as under: full upfront payment (100 percent) or minimum 50 percent upfront payment, while the remaining to be paid in five equal installments in five years with cumulative markup rate of one year LIBOR+3 percent.

Moreover, if auction winner intends to pay the remaining balance liability on account of initial spectrum fee at any time before the end of five years, it would be acceptable and without any pre-payment penalties.

However, mark-up at the rate LIBOR+3 percent shall be payable on the balance amount till the date the final payment is made.

A new license shall be issued to the successful bidder for the auctioned spectrum.

The tenure of frequency assignment shall be 15 years.

According to the policy directive for the auction of NGMS spectrum in AJK and GB (a) A transparent, competitive process shall be formulated by the PTA for auctioning 2x16 MHz spectrum in the 1800 MHz band and 2x30 MHz spectrum in the 2100 MHz as made available by the FAB; (b) the base price for 2x1 MHz (1 MHz paired) spectrum in both I800 and 2100 MHz bands is $0.87 million respectively; (c) additionally 2x10 MHz spectrum earmarked by FAB for SCO in both 1800 and 2100 MHz bands is approved for assignment to SCO; (d) the spectrum assignment will be ''Technology Neutral" and usable for all existing and upcoming advanced generations/technologies within the applicable policy framework of the government of Pakistan; (e) payment terms shall be as under (I) minimum 50 percent upfront payment within one month of auction date, while the remaining to be paid in 10 equal instalments in 10 years.

Moreover, if auction winner intends to pay the remaining balance liability on account of initial spectrum fee at any time before the end of 10 years, it would be acceptable and without any pre-payment penalties.

The PTA shall transfer auction proceeds to the AJK and GB Councils less the administrative charges, cost of regulation and consultancy charges within 30 days from the receipt of said fee.

The tenure of frequency assignment will be for 15 years.

Spectrum won under auction process will be incorporated by the PTA in the renewed cellular licenses (due for renewal in June 2021 i.e. of Jazz, Telenor, and Ufone).

However, in order to align the expiry dates of cellular licenses in the AJ&K and GB, the tenure may be accordingly adjusted by the PTA for the CMP PAK license, which is due for expiry in August 2022 with necessary payments and adjustments.

Provisions for active infrastructure sharing, Spectrum Trading and Sharing will be incorporated in the new licenses and will take effect as per the approved regulatory framework.

Federal Minister for Information Technology and Telecommunication Syed Aminul Haque said that all has been set for the auction of additional spectrum in Pakistan, the AJK, and GB, and issued necessary instructions to the PTA to finalise the preparations for the auction and other matters.

Haque said that for the first time in the history of the country, additional spectrum would be auctioned for the AJK and the GB.

After the completion of this phase, not only in sub-urban and urban areas of the country, the quality of mobile networking and broadband services will also be enhanced in the hilly areas of the GB and customers will have uninterrupted services.

It is hoped that billions of rupees will be deposited in the national treasury through the auction of additional spectrum, he added.

The Federal Minister for IT said that after approval from the Federal Cabinet, the auction process would be completed by the end of September.

In this regard, he issued necessary instructions to the PTA to finalise the preparations for the auction and other matters.

Copyright Business Recorder, 2021