First of its kind in Pakistan: 3G-4G auction fetches $1.1 billion

All 3G licences, one 4G licence sold; decision on sale of the remaining 4G licence to be taken soon.

ISLAMABAD:

Pakistan on Wednesday successfully completed the auction for next-generation telecom spectrums – the first of its kind in the country – raising $1.112 billion or Rs111 billion from the process.

The Pakistan Telecommunication Authority (PTA) had offered three bands for the 3G spectrum – with a total available frequency of 30MHz – and two bands for the 4G spectrum.

Out of the four competitors participating in the auction, only Zong managed to secure licences for both 3G and 4G spectrums; the other three – Mobilink, Telenor and Ufone – secured only 3G licences.

While the PTA managed to sell all three bands of the 3G spectrum on offer, it could only sell one 4G licence after Ufone – the only other bidder for the spectrum – was disqualified on technical grounds.

The $1.112 billion that the country has earned from the sale is just $17 million or 1.6% higher than the reserve price of $1.095 billion for these licences. The $210 million on account of the unsold 4G licence is excluded from calculations.

“But surely, it will usher in an era in which the country’s youth will have accesses to modern telecom services and create thousands of new jobs,” said Minister of State for Information Technology (IT) Anusha Rahman.

After the last round of bidding, PTA Chairman Dr Ismail Shah announced “all spectrums in 2100MHz (3G) have been sold.”

“But we could only sell one licence in 1800MHz (4G) as Ufone was unable to qualify,” he said.

Shah explained that a bidder only qualified to bid for the 4G spectrum after winning a minimum 10MHz in the 3G spectrum. He said that despite bidding for 15MHz in the 3G spectrum, Ufone could only win 5MHz.

CMPAK Limited, better known as Zong, bid the highest – $306.9 million – for a 3G licence in the 10MHz band, making it eligible for getting a 4G licence at a base price of $210 million.The base price for 3G was set at $295 million.

Of the total $1.112 billion earned by the government, Zong – which is fourth largest among Pakistan’s five existing telecom players – paid $516.92 million for the two licences.

“Zong is very excited for becoming the only party to win both 3G and 4G frequencies and will roll out the services at a fast pace,” said Sikandar Naqi, the adviser to the chief executive officer of Zong.

While Mobilink – the largest telecom player in the country with 29% market share – also won a licence in the 10MHz band, it opted against bidding for a 4G licence.

The final 10MHz band was divided into two 5MHz slots, one of which was won by both Telenor and Ufone each.

Mobilink paid $300.9 million for a 3G licence in 10MHz, making it the second highest bidder. Telenor and Ufone, however, got 3G licences at base price, creating suspicions of collusion. Ufone, by choosing to bid for 15MHz, had also forced PTA to break one 10MHz band into two.

Meanwhile, the PTA chairman said the decision to sell the last 4G licence will be taken soon.

“PTA’s decision to not allow Ufone to bid for a 4G licence after it failed to fulfill the requirement was a good decision… it ensured that the process remained transparent,” Finance Minister Ishaq Dar said while speaking at a news conference after the auction.

Asked whether the PTA will forfeit the money deposited by Ufone after the telecom operator won less than it had bid for, Dar said the decision will be taken after receiving input from the law ministry.

‘Govt earned more than it expected’

Talking to reporters, the finance minister said the government had earned more than it had initially estimated.

He said the government could still earn at least Rs50 billion more from the last remaining 4G licence, in addition to the Rs111 billion it had earned from the sale already. One more licence is also being kept for a new entrant, he added.

Dar said the government, by successfully conducting the auction, has established that it has the ability to fulfill the promises it has made to the nation. He said the introduction of new telecom technologies will create hundreds of thousands of new jobs.

The minister hinted at giving tax relief to users of telecom services, but said a final decision will be taken in the upcoming budget.

On issue of YouTube, he said in addition to the Supreme Court’s directives for keeping the video-sharing portal blocked until the removal of blasphemous material, Prime Minister Nawaz Sharif has also directed PTA to remove videos showing pornography and mutilated bodies of security personnel.

Published in The Express Tribune, April 24^th, 2014.