ISLAMABAD - The government on Wednesday raised more than $1.1 billion in its long-delayed auction of next-generation telecommunications licences, snapped up by the country’s four existing mobile network providers.
The government sold off four licences to provide 3G services, which allow broadband-speed internet on mobile phones, and one for superfast 4G connections – which was heralded by the government officials as a success that would positively affect the country’s economy.
The total amount to be accrued is $1,120 million from the sale, below a bullish prediction of $2 billion made by Finance Minister Ishaq Dar in January. But the minister said that one 4G spectrum slot, which was also up for sale but could not be auctioned, would be offered again at a later time to raise more funds.
The auction event was held in Islamabad at a local hotel, where PTA Chairman Dr Ismail shah announced the results after a bidding process that lasted for nine hours. Two big multimedia screens had been installed in the hotel hall for the auction.
Prices of the bids rolled on the screens as journalists and general public viewed the auction process. The interested buyers, who were sitting separately in cabins in the hall, participated electronically. The bidding was scheduled to start at 8 am but the proceedings started with a delay of two hours.
Announcing the results Dr Shah said that for 3G auction under 2100 MHz band, the available spectrum of 30 MHz was distributed into 10 MHz, 5 MHz, 5 MHz and 10 MHz out of which ZONG won the bidding of 10 MHz, Mobilink was successful in 10 MHz, Ufone and Telenor won 5 MHz each.
Zong won the 10MHz of 2100 band at the price of $306.9, Mobilink at $300.9 million, Ufone and Telenor of 5 MHz at $147.5 million each, totalling the amount at $902.820 million. Whereas in 4G band of 1800 MHz, only Zong won 1 block at the base price of $210 million that was set by the government. A foreign news agency had earlier reported that no bid had been received for the 4 G licence.
Telenor is a Norwegian company, Mobilink is Russian, Ufone is owned by the Pakistani government and Zong is part of China Mobile, a Chinese company. All four operators are already established players in the Pakistani mobile market. Sikanadar Naqi, a Zong advisor, said the company would begin 3G services in the cities of Lahore and Karachi immediately.
There were 4 slots available in 2100 MHz band for 3G services and 2 slots were available in 1800 MHz band for 4G services. Break of slots in 2100 MHz band was as 2 slots of 10 MHz and 2 slots of 5 MHz totalling 30 MHz offered by Pakistan Telecom Authority. 2 blocks of 10 MHz each were available in 1800 MHz band.
After the completion of the bidding, Finance Minister Ishaq Dar said that the government has successfully completed the auction process. Dar said that Prime Minister Nawaz Sharif was committed to introducing new technologies in the telecom sector. To a query regarding multiple taxes imposed on cellular sector, the minister said that the government would take up this issue with the provinces and other stakeholders about imposition of GST as well as FED and would try to resolve it.
About the unsold blocks, Dar said, “The government is free to auction the remaining spectrum any time that is available with it and that will fetch more money.” But about the timeframe to sell the remaining available spectrum, Dar said, “Prime minister would take decision in that regard with the consultation cabinet and stakeholders”.
Ishaq Dar said that the winners are liable to deposit 50 per cent of the bidding price upfront and the remaining can be paid in 5 instalments in the next five years. But he said the instalment will be with 10 per cent on per annum basis with 3 per cent interest rate plus London Inter-bank Offered Rates (LIBOR). About the payment mode, he said the winners can pay in rupees as well but the dollar rate prevailing on that day will be used as standard to covert dollars into rupees.
Dar congratulated a beaming Anusha Rehman for “successfully conducting” the bidding process. Information Technology Minister Anusha, speaking at the occasion, claimed that the auction would spur employment in the country. “Around 900,000 jobs will be generated due to 3G/4G technology,” she said. She also hoped that there will be around 1.5 to 1.8 per cent additional growth in GDP due to this technology.
A study by the UK-based Plum consultancy in August last year said 3G could boost Pakistan’s GDP by between 380 billion and 1,180 billion rupees ($3.8 billion to $11.8 billion) by 2020, and between 23 billion and 70 billion rupees in additional tax revenue generated by 3G.
To a question about opening of Youtube, which has been banned since Sept 2012, Anusha Rehman said that on the directives of Lahore High Court a committee was constituted which would meet by end of next month to come up with recommendations to lift the ban. Dar referred to Supreme Court orders to PTA to remove blasphemous content from the site and said until then the site would remain blocked. But Dr Ismail Shah said no country in the world can block the content while keeping YouTube functional at the same time.
Pakistan has more than 132 million mobile phone subscribers but has lagged behind its neighbours in setting up 3G, which is now the norm in many countries. Even Afghanistan, Pakistan’s far less developed western neighbour with a weaker economy and more fragile state, has had the technology since 2012. Cheap mobile phone telephony took Pakistan by storm in the early 2000s, but only 3.3 million people are signed up to broadband internet, according to PTA figures, offering a huge, untapped market for faster web speeds.
Information Technology Minister Anusha Rehman hailed the auction as a boon for Pakistanis unable to afford computers and fixed-lined internet connections. “Through this, the cheap mobile phones of the under-served people having a price of eight to ten thousand rupees will be become their computers,” she said.