ISLAMABAD: The government has launched a mega campaign for auction of three licences for third generation (3G) telecommunication services in the country and has set a base price of $210 million for each licence.
The campaign got under way with an investor conference here on Tuesday. It is the first such conference as the process of privatisation and attracting new investments had been on hold for the last many years due to security problems and economic slowdown.
“Three licences of 3G will be auctioned for a period of 15 years to both new and current players in the market,” announced Dr Mohammad Yaseen, Chairman of Pakistan Telecommunication Authority (PTA).
However, the new bidders will operate the spectrum after March 2013, he said referring to the restriction in a sale deed struck between the government and Etisalat, the 26 per cent shareholder in Pakistan Telecommunication Company Limited. Yaseen said each bidder may win a maximum of two licences.
According to a PTA document, the base price for each 3G licence will be $210 million with bid earnest money of $31.5 million. The licence will be auctioned through multiple rounds and open outcry method.
“I make a commitment that the process will be totally transparent and merit will prevail,” said Dr Abdul Hafeez Shaikh, the Finance Minister.
Yaseen said a pre-bid conference for the sale of 3G licence would be held on March 2 and the bidders’ qualification process would be completed by March 12. By March 22, the bidders will deposit the earnest money and auction will be held on March 29.
The government also unveiled a plan for the auction of defunct licence of Instaphone. The base price will be $155 million with bid earnest money of $23.28 million. The licence will be for a period of eight years.
Independent experts in the telecoms industry said the base prices were according to market values. They said Instaphone’s base price was lower due to a small operational period. If big players jumped into the race, the government might get a good price, they added.
The government has estimated that it will get Rs75 billion or $833 million from these auctions, show budget documents of the finance ministry.
Yaseen said Pakistan has the most investor-friendly policies in the region with no restrictions on repatriation of capital gains and equity. He said the country has 68.4 per cent teledensity ratio. Cellular subscription reached 111.1 million and telecom revenues crossed $4 billion.
Yaseen said the government would also auction wireless local loop spectrum but the offer would be limited to existing players. For this, a pre-bid conference will be held in February.
Published in The Express Tribune, January 18th, 2012.