$100m Investment Withdrawn – Thanks to High MVNO Fee

As feared, investors are backing off with their plans to invest millions of dollars in Pakistan due to high MVNO fee – claimed “The News” in its recent report.

Newspaper said that at least one out of three companies, which had applied invest in industry, has withdrawn its decision to invest $ 100 million, due to increase in the license fee by the Pakistan Telecommunication Authority (PTA).

Friendi Mobile had entered into an agreement with ZONG, back in November 2009, and was planning to invest up to $100 million in Pakistan, reported the paper, quoting Haider Raza a venture partner of ePlanet Ventures that is funding the Friendi Mobile.

We decided to drop the idea of investing in Pakistan when PTA increased the licence fee from $10,000 to $5 million, now this investment would be made in Kuwait where the licence fee is only $5,000. It is far better for us to invest in our service instead of giving $5 million as the licence fee.

MVNOs could bring in FDI of $100 to 200 million and light the path for other telecom and internet investments, said Haider Raza

Friendi Mobile, funded by US-based ePlanet Ventures, is actively involved in acquiring MVNO licences. Friendi is the first pan-regional MVNO in the Middle East.

Secretary Telecom, Najeeb Ullah Malik said that he was unaware of the issue. Fixing licence fees is the role of PTA, he said.

An independent expert who was in the past involved in the making of the MVNO policy said that the huge MVNO licence fee was unjustified as the government had already sold the spectrum to cellular companies. The MVNO would not be allocated a new spectrum rather they would only use the existing spectrum of the different companies so it was unfair to ask them to pay an exorbitant fee, he added.

Chairman PTA, Dr Yasin, talking to The News said the licence fee was an irrelevant issue, as it did not make any difference to investors. The PTA had had a bitter experience of low licence fees in WLL and Pay Phone cases so it would not repeat the old mistake again, which is contrary to what serious investors are saying, he added.

Other MVNO operators interested investing in Pakistan includes Roshan Telecom. While there are more looking for the trends and possibly a regulation change.

It merits mentioning here that according to a framework for MVNOs, MoIT had advised PTA for $10,000 license fee, however, PTA regulated 5 million dollars for one MVNO fee.

Tech reporter with over 10 years of experience, founder of ProPakistani.PK