The federal government is all set to renew licences of cellular companies for another 15 years against millions of dollars fee, well informed sources told Business Recorder.
Cellular licences were issued by Pakistan Telecommunication Authority (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 installment in order to maintain a level playing field. Telenor Group has recommended that upcoming 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.
Section 8(1), 8(2)(a) and 5(2)(a) of the Pakistan Telecommunication ( Re-Organisation) Act, 1996 provide the policy framework for determination of terms and conditions of licences.
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. 8(2) the matters on which the federal government may issue policy directives shall be- (a) the number and term 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 has 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 installments 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 CMPak 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.