Mobilink confirms participation in 3G auction

Telecom giant going for at least one of three licences up for grabs ; low base price of licence questioned in Senate.


Shahbaz Rana January 25, 2012

ISLAMABAD:


In a move that is likely to put at rest apprehensions that the market does not have appetite for more investment due to the economic downturn, Pakistan’s largest telecom service provider on Wednesday announced to participate in the auction for third generation (3G) telecommunication services.


Rashid Khan President of Pakistan Mobile Communication Limited, commonly known as Mobilink, while talking to the media said that his company “is evaluating the information memorandum of 3G spectrum and has decided to participate in the bidding”. He, however, said it was not clear whether the company would bid for one or two spectrums. Under the agreement, any bidder can bid for maximum two spectrums. The telecom sector regulator has announced to auction three licenses of 3G.

The auction is scheduled to be held in March.

He said that despite the global economic recession there was an enabling environment for cellular business in Pakistan.

Mobilink has captured almost one-third of the total market followed by Telenor with 24.9% and Ufone – a subsidiary of the PTCL – with 18.7%.

Market players Mobilink and Ufone have upgraded their telecom hardware to 3G after purchasing telecom equipment from Huawei in the last two years

The announcement is likely to send positive vibes in the market and will counter rumours that the government may not be able to earn good return on licenses due to persisting economic instability in the country. The finance ministry has estimated that it will generate $833 million or Rs75 billion through the auction of 3G licences as well as the dormant Instaphone licence.

The base price for each 3G license would be $210 million with bid earnest money of $31.5 million. The licence will be through multiple rounds and open outcry method.

Khan said that it was a reasonable base price determined on the basis of telecom policy. He ruled out that the five telecom sector companies were colluding for the bid.

Senator Pervez Rasheed was the latest to question the transparency of 3G auction by mentioning in the Senate session that $210 million has been fixed as it base price, much lower than the $290 million fixed for 2G license. He demanded to immediately stop this process and review its conditions to avoid any chances of embezzlement.

The PTA has asked the bidding parties to submit one-time upfront initial license fee equivalent to the value of auction within 60 working days of the auction date. The pre-bid conference is scheduled for March 2 while the auction would take place on March 29.

Three licences of 3G would be offered for a period of 15 years to both new and current players in the market. However, new players will not be able to operate the spectrum till March 2013, a deadline imposed due to a sale deed struck between the government and Etisalat, 26% shareholder of Pakistan Telecommunication Company Limited.

Khan said there was a need to review taxation on calls as currently the effective rate is over 30%. He said besides 19.5% sales tax the users also pay 10% withholding tax. He said Pakistan’s cellular tariffs are the lowest in South Asia.

Published in The Express Tribune, January 26th, 2012.

COMMENTS (4)

NOMAN | 12 years ago | Reply

Great ... Im waiting for this.

ahsan | 12 years ago | Reply

great ......waiting anxiously

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