Auction of 3G, 4G licences worth hundreds of millions of dollars approved
ISLAMABAD: In a positive development, the government has decided to initiate the process of auctioning of new mobile technologies by end of March or early April under the policy directives of Prime Minister Muhammad Nawaz Sharif.
Under these directives, three 3G licences of 10 MHz in 2100 MHz spectrum band, two 4G licences of 10 MHz paired spectrum in 1800 MHz band and one licence of defunct Instaphone (PakCom) in 850 MHz spectrum band would be offered for auction. The auction process will be completed by mid-April.
Finance Minister Ishaq Dar disclosed this in a press briefing held here on Friday evening. Flanked by the minister of state for information technology, the minister said that the base price had been fixed at $295 million for each 3G licence and $210 million for each 4G licence and $291 million for once licence of 7.38 MHz in 85 MHz spectrum band.
He said, “The total base price of six licences stands at $1.596 billion and we are expecting more price in the auction that the government may get in the range of $2-3 billion in five years. However, in the budget for the current fiscal, we have fixed the amount of $1.2 billion to be earned from the auction of the next generation licences.”
One licence of defunct Instaphone (PakCom) in 850 MHz band will be offered in the auction and if only one party comes in for the said licence, that party will be given the licence and in case two or more than two parties participate in the auction of one licence, they will have to compete.
The duration of the licence will span over 15 years, but the licence fee will have to be paid by the winners in five years time in installments. However, a minimum 50 percent upfront payment is mandatory while the remaining amount will be paid in five equal instalments in five years with interest rate at KIBOR plus.
To a question, the minister said that the Ministry of Information Technology was also going to hold roadshows to allure the maximum number of parties. He explained that the fee of 4G licences was less than the 3G licence because the parties which would buy the 3G licence would be able to purchase the 4G licence. The buyer of 3G licences would have to pay add-on price for the 4G licences knowing the fact the 4G licence technology was more recent.
The minister said the government would encourage full upfront payment from licence winners. The previous government had tried to hold the spectrum auction for the next generation mobile services, but failed to do so and this government had managed to initiate the process by end March that would end by mid-April.
This step will enable the people to benefit from the new technology in mobile industry that would also bring huge employment.The minister said that a lot of precious time had been lost in auctioning of the future generation spectrum licences and when the Nawaz government came on the scene, the Pakistan Telecommunication Authority (PTA) was not functional. “We made it functional in the shortest-possible time.”
To a question about expected cartelisation in the mobile industry after the auctioning of the new generation licences, Senator Dar said that the government had carved out a mechanism to curb this menace.
The minister said the entire process would be executed in a transparent and competitive way. For this, he said, the government had selected one of the best consultants in the field — M/s Value Partner Management Consulting Limited.
“We firmed out the recommendations for IM (Information Memorandum) through a consultative process with tele companies, experts, industry analysts and the consultant and sent the final recommendation which the prime minister has approved. Now the information memorandum will be uploaded on the website of PTA for interested parties for the auctioning of the next generation licences,” he said.