PM approves 3G, 4G auction, plans to get $1.6 billion
ISLAMABAD: Prime Minister Nawaz Sharif has approved a finalised Information Memorandum (IM) for selling spectrum of 3G and 4G by allowing moratorium of 18 months for not conducting any new auction, imposing penalty and suspending or terminating the winner’s license in case of non-payment of due amount.
“Our government has increased the base price from $1.2 billion to $1.6 billion for the upcoming spectrum auction and transparency will be ensured at all costs to maximise benefits for the country and people of Pakistan,” Minister of State for Information Technology Anusha Rahman said while addressing a press conference here on Tuesday.
Flanked by secretary IT and chairman PTA on the occasion, the minister said the cellular companies demanded moratorium of five years but the government agreed to provide 18 month relaxations under which no new spectrum auction would be conducted.
This moratorium of 18 months, she said, would not be applicable on the existing offered auction as in case no bidder came forward for any of the existing offered option, then the government would be able to re-auction it. The government was expecting at least five
players, including M/S Warid, would participate inthe bidding process. She said that new entrants were also coming but the government could not provide them facilities at the cost of existing players.
The government has set the base price as US $295 million for 10 MHz paired spectrum in 2100 GHz band, US $210 million for 10MHz paired spectrum in 1800 MHz frequency band and US $291 million for 7.38 MHz paired spectrum in 850 MHz frequency band. The last one is only reserved for the new entrant.
She said that first time in the country’s history the government has made it mandatory on winners for depositing 50 percent upfront amount and then deposit the remaining 50 percent in shape of five equal installments with LIBOR plus 3 percent along with every installment.
“We have also introduced a clause under which the winners’ license can be suspended or terminated in case of non-payment,” she added.The government, she said, also hedged the amount with US dollars as it was demand of the cellular companies for allowing payment in rupee as some of them had to raise money through domestic borrowing.
Referring to a report, the minister said that the auction of 3G spectrum would enhance GDP growth from Rs380 billion to Rs1180 billion over next 5 to 7 years and tax revenue would go up by Rs23 billion to Rs70 billion. “It will generate around one million new jobs in the country,” she added.
When asked about discouraging collusion of cellular companies, the minister said the government pitched higher base price of $1.6 billion in order to safeguard its interests, as the bidders would not be able to go less than this minimum price.The government has also taken guarantee of rolling out network in this new auction. The regulator, PTA would ensure quality of service.