Resuming the 3G auction process
Recent weeks have witnessed a series of important developments vis-à-vis the process of auctioning the third-generation telecom licenses – a process that was delayed earlier this year after considerable activity and hype.
Resumption of the auction process awaits a consultant, and the PTA and the Ministry of IT are currently said to be invested in selecting one. Two auctions are being planned, first one being that of defunct Instaphone license, where one block of 7.38MHz in the 800 MHz frequency band will be up for sale. In the main auction, three blocks of 10MHz each, in the 1900/2100MHz bands, will be sold for 3G networks.
Deadline for submission of the consultancy bids was September 24. The selected consultancy firm will advise and assist PTA on key aspects of the two auctions, including designing the auction process, preparing technical & financial evaluations of the spectrum on sale, attracting wider participation from telecom operators at home and abroad, and fetching optimum value from the spectrum auctions.
To avoid the communications lapses and all the bad press – which PTA had to deal with earlier this year when it first set out to auction these licenses – a Communications Agency is being hired this time. The official advertisement outlines that the agency will design marketing campaigns, PR strategies and digital communication for these auctions.
Though it is not specifically mentioned in the PTA advertisement whether foreign PR agencies can or cannot apply, the eligibility requirement of “accreditation from APNS, PBA, and other relevant bodies” seems to benefit local marketing and PR agencies that may choose to bid for the contract.
Two weeks back, PTA organised a pre-bid conference for potential consultancy firms, where some interesting details were thrashed out. The official communiqué shows that although PTA provided the prospective consultants with more time by allowing them to send their technical proposals via email, and financial bids via courier service, before the deadline.
It has also been decided that PTA will bear the expenses incurred on road shows inside Pakistan, but the foreign road shows will be funded by the consultant itself while the government will bear its own travelling & boarding expenses on these trips.
The new schedule issued by the PTA shows that hiring of the consultant will be finalised by October 5, and a Letter of Intent will be issued forthwith. This contract will formally be awarded by October 15. Within a month, the consultant would hammer out details of the auction afresh, and issue the new Information Memorandum on November 15.
The incoming consultant must design the auctions competitively, as that is the only way to arrive at a price point where interests of all the stakeholders (government, operators & future 3G customers) can converge. PTAs old IMs present a faulty auction design, in that does not incentivise foreign operators much, and could be hostile to customers as 3G spectrum could be concentrated among a few operators.
Pakistan is in dire need of foreign inflows to support its balance of payments, and these auctions can yield substantial amount of funds. If PTA sticks to the schedule this time, chances are that this auction may actually be completed early next year, possibly by January.
However, the troubled political economy will naturally figure in this matter, too. For one, the opposition may not be too keen on letting the government finish a potentially billion dollar transaction when parliamentary elections are just round the corner. Then there is always the risk of administrative confrontation (between government and the apex court) spilling over to economic decision-making.
What is important is that the authorities must go about the pre-auction process transparently and meticulously – rest should be viewed as force majeure!