Auction of 3G/4G spectrum still hangs in balance

STAFF REPORT ISB: The auction for next generation network spectrum (3G/4G) hangs in the balance, as InterConnect Communication, the consultant hired for the auction, has reportedly painted a gloomy picture of market readiness.

According to an official in PTA, the consultant has completed the market assessment after holding a series of meetings with various stakeholders, including telecom operators in the country. After extensive exercise, the consultant has drafted a report and submitted to the Evaluation Committee of the regulatory authority.

The body will go through the report, evaluate and will take a final decision about 3G/4G spectrum auction, the sources said.

They revealed that the consultant has assessed the market potential for spectrum auction, existing market players, their problems, revenues, investment and auction objectives related to telecom sector growth and revenue. The summary of this report indicates that five telecom players are already operating in the market with low margins and tough competition.

They say that the government has not honored its commitments made with them at the last auction of spectrum. Moreover, the operators intent for investing in the spectrum is lacking and any auction in near future could not bring any notable participation from them.

The situation became worse for the government after the Mobilink-Warid decision of a merger. If the merger gets approved, Mobilink will not need to participate in the upcoming 4G license while Zong is already carrying both 3G/4G licenses. The government budgeted Rs 56 billion for 2014-15 and showed it as realised in the revised estimates for 3G/4G auction that never took place. For 2015-16, the revenue from 3G/4G auction has been inexplicably raised to Rs 65 billion.

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