3G for one-year demand of New Entrants rejected

ISLAMABAD (MEDIA )

The PML-N government has refused to grant exclusive spectrum rights on 3G for a one-year period to two foreign cellular companies who wished to become new entrants in the upcoming auction for next-generation spectrum licences, . “We cannot fulfill the demands of new entrants at the cost of existing cellular companies operating in Pakistan so the government, the regulator and the consultant refused to accept the demand of giving exclusive right on 3G for a one-year period in complete consultation with the top guns of the incumbent regime,” a ministerial source told The News

The government, according to the source, had offered to provide 850 MHZ spectrum to these two foreign companies as well as making it mandatory for other cellular companies to provide them the facility of national roaming on a commercial basis.

“But these foreign cellular companies did not see it as a feasible business option for them where the voice penetration of existing companies stood at 73 percent,” said the source.

However, the government tried to convince the companies by reminding them that broadband penetration in the country stood at two percent, in essence allowing the new entrants to compete with existing companies for the remaining 98 percent share.

“It is the reason due to which no new entrant has come for the spectrum auction as the government cannot penalise those who have already invested billions of dollars in Pakistan,” said the source.

When asked about the next phase of the auction process, the source said that it would be two-tier process as the regulator, PTA, had already received sealed bids from four existing companies. No further details have been revealed in this regard.

The PTA will unveil which companies have qualified for the spectrum licences on April 17. There are four available 3G blocks: two 10 MHz and two 5 MHz.

The base price for 10 MHz block is $291 Million and 5 MHz is $146 million. All companies applying for spectrum would have to apply for either of the two to be eligible in the auction process.

“The four cellular operators, which have submitted their sealed bids, are committed to provide the $1.3 billion base price to get next-generation spectrum licences,” said the source.

The regulator, PTA, in collaboration with the consultant and other stakeholders made it mandatory through its Information Memorandum (IM), a document which was approved by the Prime Minister on the basis of which the auction would be conducted, that all parties which have submitted bids would have to get the spectrum share at least at the minimum base price.

The government, the source said, is content over the development that demand exceeds the supply side and competition on price will be expected on the auction day of April 23, 2014.

The consultant, in its initial analysis, had estimated that the country will raise a maximum of $700 to $800 million through the upcoming auction but the government and other stakeholders made efforts to raise it up to the base price of $1.3 billion in order to meet its budgetary target for the ongoing fiscal year.

“It took almost five months for jacking up the price of next generation from $800 million to $1.3 billion at least,” the source added.

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