Govt gears up to auction last 4G spectrum

Aims to increase earnings ahead of its last budget presentation this year

Salman Siddiqui March 19, 2017
PTA may formally kick-start the process for the auction in a week or 10 days by inviting bids from interested mobile phone service-providing companies. PHOTO: FILE

KARACHI: The government is set to auction the last spectrum of 4G mobile internet at a minimum price of over $210 million in May-June, to increase its earning ahead of the last federal budget presentation of its elected tenure.

A senior official who remains deeply engaged in the ongoing process of the forthcoming auction said China Mobile (Zong) acquired 4G spectrum of similar technical specifications at $210 million in 2014.

“The base-price for the forthcoming auction [for 10MHz in 1,800MHz] would be higher than $210 million,” he said while talking to The Express Tribune.

Ministry of Information Technology and Telecommunication Spokesperson Sagheer Ahmad Wattoo added that Pakistan Telecommunication Authority’s (PTA) consultant has recently conducted a market survey to know the appetite and demand for acquisition of the spectrum. The survey reports suggests “the appetite and market demand for the spectrum [4G] is too high...the auction is expected to invite healthy competition from mobile companies,” he said.

Telcos allowed network sharing for better service

He said that internet usage would supersede voice-calls on smartphone very soon, as demand for internet-data from mobile phones users is escalating at a much faster pace. At the same time, mobile phone usage as a call-making device is declining.

“The smartphone has replaced the laptop. We now check emails and do other internet related work on smartphones. Even, voice calls are made on internet now,” he said.

An official of the mobile phone company agreed that that the portion of earnings from internet usage is increasing, while earnings from voice calls and SMS are declining.

Everyone, including the senior official, the industry official and the ministry spokesperson, said all the mobile phone service providing companies, except Telenor, may participate in the auction.

They agreed that Ufone would be a participant in the auction, as this is the company with the lowest bandwidth in a 3G spectrum. Moreover, all the other players also have 4G/LTE spectrum. The chances for Telenor’s participation in the forthcoming auction are low because it has acquired a 4G spectrum for $395 million about a year ago.

Secondly, Telenor is focused on cost-cutting these days. “It has very recently sold its operations in India to Bharti Airtel Limited,” the industry official said.

“If base-price for the auction is not set high, the chances of participation from Jazz and Zong are also high,” he opined.“There is no such issue of finances with the sponsor (multinational) companies of the three possible participants [in the auction],” said the official.

The senior official said, “There is almost no chance for a new entrant. The existing companies, except for Telenor, may participate in the auction.”

PTA may formally kick-start the process for the auction in a week or 10 days by inviting bids from interested mobile phones services providing companies.

Pakistan’s 3G, 4G user base rises to 32 million

Wattoo added that the ministry has sent a set of recommendations comprising of base-price and other provisions for the auction to the Cabinet for approval.

Prime Minister Nawaz Sharif is also taking a keen interest in the auction, as he is the authority who constituted an advisory committee for the auction in February. “The Cabinet would approve the recommendation as soon possible and without wasting any time,” he said.

The Cabinet approval would authorise PTA to begin with the process.

According to PTA’s latest data, the four mobile phone companies in the country serve 137.09 million customers. Almost 28% or 38.26 million of them are users of 3G/4G mobile internet as on January 31, 2017.

Wattoo added, “Only 3% of the mobile phone users used to use internet about 3 years ago or before the government held first auction for 3G/4G/LTE spectrums in 2014.”

It would be the third auction of the spectrum since 2014. The government has earned around $1.5 billion in the last two auctions.

Increase in revenue is the need of the hour for the incumbent government completing its elected 5-year tenure in the first half of 2018. And it will be its last presentation of budget sometime in June.

Published in The Express Tribune, March 19th, 2017.

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