3G licence auction: Government moves to address concerns of existing telecom players

Hopes to fetch Rs75b from sale of licences for advanced telecom services.

ISLAMABAD:

The government has constituted a ministerial committee in an attempt to allay concerns of stakeholders before auction of licences for advanced telecom services which is expected to fetch Rs75 billion – a necessary requirement for meeting new budget targets successfully.

Sources told The Express Tribune the government’s bid to earn Rs75 billion through auction of licences for third generation mobile telecommunication services, known as 3G, largely depends on addressing concerns of an international telecom player, active in Pakistan. The third generation mobile telecommunication services include wide-area wireless voice telephone, mobile Internet access, video calls and mobile TV.

Sources said the cabinet has recently constituted a three-member ministerial committee to finalise the auction and address concerns of the telecom player. The committee is headed by Finance Minister Dr Abdul Hafeez Shaikh and comprises Privatisation Minister Ghous Bux Mehar and Water and Power Minister Naveed Qamar. The information technology secretary will assist the committee.

The government has introduced a tight budget for financial year 2011-12 with a projected deficit – the gap between income and spending – of four per cent of total national income or Rs851 billion. The government relies on so many factors to meet this target including earning Rs75 billion from 3G licences and recovery of Rs70 billion for sale of 26 per cent shares of Pakistan Telecommunication Company (PTCL). Only these two components amount to around 0.6 per cent of gross domestic product.

For the outgoing fiscal year too, the government hoped to receive Rs60 billion from auction of 3G licences and Rs70 billion from PTCL, but failed to do so.

Sources said there are differences of opinion on the interpretation of an agreement between the government and the international telecom player, reached during sale of shares of the state-owned telecommunication company. The telecom giant was of the opinion that Pakistan could not sell new telecom licence of any spectrum until seven years – a condition that according to it will mature in March 2013.

The government has taken a position that 3G is not something new but actually an extension of existing services. It has also given a different interpretation of the time limit. “The deadline will come to an end in January 2012, giving the government enough room to auction the licence before the close of next financial year,” said Rana Assad Amin, spokesman for the finance ministry.

He said Pakistan would have auctioned the licence last year, but wanted to encourage new international players to enter into competition.

“Technically, we are ready for auction as all spectrum-specific arrangements have been made and the private sector has also agreed to participate in the auction,” said Saeed Ahmed Khan, Secretary Ministry of Information Technology.

Published in The Express Tribune, June 22^nd, 2011.