3G Drive to Get Bumpy

We told you; 3G won’t be as simple as it seems or the way our government is aiming to auction 3G licenses to grab Rs. 75 billion to straighten its balance of payment crisis. Exactly like I mentioned in my previous post here, after welcoming notes earlier this month, operators have started to worry about their (forced) investments.

3G proposition is getting complicated; investment required is huge, return seems too low, market situation is unstable, political scene is way to vague, value of Rupee is depleting and above all: cellular mobile operators are contented with their current setup and earnings, why would they need to invest more?

Analysts see government busy enough with president’s health, memogate and Supreme Court hearings to not to think about 3G. However, at the same time they argue that part of government is focused on the money it sense ripe through 3G license auction.

Money is the seemingly the main concern or otherwise, if reports are to be believed, government will fall into severe balance of payment crisis in current fiscal year. Especially with its ever growing tension with USA after NATO attack, blockade of US AID and IMF funding plus non-payment of USD 800 million by Etisalat.

Operators are eyeing all this very closely. They are already busy with their moves, tell me senior people in the industry. Mergers look like an option but time they have got is so little that it seems impossible for them negotiate. Off the record interviews reveals that everyone is concerned but no clear roadmap is defined so far, mainly because government itself looks too shaky at the moment. Maybe everyone is relying on fate to get things settled.

On a similar note, after showing interest in 3G license auction earlier, Mr. Walid Irshaid, President and CEO of PTCL, in his recently published interview with ‘Voice & Data’, said that 3G cannot sustain in current industrial environment in Pakistan.

He justified his arguments by rightly saying that 3G network will be laid for data, not for voice, which will require almost three times more infrastructure because of the frequency spectrum and data needs of the subscribers.

He said:

There cannot be five 3G operators here. There has to be only 2 to 3 good 3G operators. They must not enter into a price war, which we have seen in the case of 2G edifice. There has to be a better control even with the regressive regimes to control the price. Operators must be able to provide quality service.

Also, 3G cannot be offered without quality.

I see more such statements from celcos in coming days, to give it an ultimate try to restrict PTA for asking letter of interest for 3G licenses. Let’s wait for the time to see how this unfolds in coming months.