After repeated delays, Pakistan readies for 3G, 4G spectrum auction in April

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STAFF REPORT ISB: In a major development, the government of Pakistan has decided to kickstart the process for the auction of 3G-4G license auction in the country as Prime Minister has approved the final policy directive for the auction to provide people with high-end and new generation information and communication technologies.


“As per the final policy directive, three licenses of 10 MHz in the 2100 MHz spectrum band (3G), two licenses of 10 MHz in 1800 MHz band (4G) and one license of 7.38 MHz in 850 MHz band for new entrants entering in the market will be auctioned,” said Federal Minister for Finance, Senator Ishaq Dar, told the press while giving details of the development here in Islamabad.


He also said that the final auction in this regard would be held in coming April.


Ishaq Dar said that the base price in the auction for a 3G license has been set at $295 million and the base price for a 4G license would be $210 million whereas for the licence for new entrant, the base price in the auction would be $291 million.


He further revealed that the successful bidders in spectrum auction would have to pay minimum 50 per cent upfront payments while the remaining payment would be made in five equal installments in five years with mark up.


“In 2011, the base price for a 3G license was set at $210 million while the payment process was to be completed in 15 years,” Dar mentioned.


Explaining about the 3G and 4G technologies, Dar said that with the introduction of advance technology, people would get rapid availability of high-end and new generation information and communication technologies in the country that would promote connectivity, efficiency and massive reduction in cost of doing business.


He said that the government, Pakistan Telecommunication Authority and consultants are very confident that the auction will receive strong support and participation both from the existing and prospective telecom operators.


It is worth mentioning here that the auction of this technology has repeatedly been delayed during the last couple of years due to unknown reasons which resultantly created doubts among the existing telecom operators as well as foreign investers about transparency of the process.


However, this time the minister reiterated the governments resolve to hold the auctions in more transparent and competitive way.


Senator Ishaq Dar said that the process had been neglected in the past and the new government has taken steps to fast track it so that the objectives of introducing new generation technologies can be achieved at the earliest.


The minister said one license has been reserved for new entrants as a number of countries including Turkey, Saudi Arabia and Qatar are showing interest to compete as a new entrant.


Dar said that as per policy, the successful bidder will have to pay 50 per cent price forthwith while the rest would be payable in five years with interest rate 3 per cent above LIBOR.


The minister said the licenses would be issued for 15 years despite suggestions by some interested parties to extend the period to twenty years.


Meanwhile, telecom industry experts, who had served in PTA at senior levels and policy making positions, believe that the issuance of just three licences for 3G-4G spectrum will bring on a repeat of what had happened with Instaphone, which had to close its operations as it was unable to compete with the new players.


Requesting anonymity, they said the upcoming 3G and 4G technologies would eliminate two of the existing five players from the Pakistan market in the next three to four years. At present, five international cellular services providers are operating in Pakistan, of which one has been up for sale for the last three years or so.


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