3G Auction Can Attract $ 1 Billion: Governor SBP

3G in PakistanThe auction of 3G licenses in Pakistan can attract more than one billion dollar as against a minimum target of $850 million, resulting positive impacts on economy mainly to contain a widening fiscal deficit of the country, said Yaseen Anwar Governor State Bank of Pakistan.

Addressing a press conference for the announcement of monetary policy, he appreciated the government efforts for auction of 3G licenses in the telecommunication sector as a positive development could help in containing the potential fiscal slippage.

He said the government’s projected privatization proceeds of $800 million of Pakistan Telecommunication Limited (PTCL) will add handsome financial inflows to the state kitty along with different sources such as issuance of $500 million “euro bonds” and $800 million from Coalition Support Funds.

The telecom sector has been in the limelight again as the sole sector that can prevent the country from economy crisis with inflows of handsome FDI through auction of 3G licenses with host of economic activities.

PTA earlier this month announced the base price of 3G licenses at $ 210 million, with maximum of three 3G/4G licenses to be auctioned in addition to one defunct cellular licenses with base price of $ 150 million.

Analysts predict the maximum value Government can attain for 3G auction wouldn’t go beyond $ 230-250 million if government fails to attract any foreign investor (operator) in the bidding. However, 3G licenses’ price can go significantly high if 2-3 foreign operators get interested in operating in Pakistan.

This increased the government’s involvement in the bidding process, which will be supervised by Ministry of Finance and Ministry of Information Technology and Telecommunication (MoITT).

The telecom sector has been major source of Foreign Direct Investment (FDI) in the past. In 2005-06, the telecom sector brought US $ 1.905 billion in the country with 54 percent share in the overall FDI, SBP figures showed.

The FDI in the telecom sector continued to fall as it share reached to merely 5 percent in the outgoing fiscal 2010-11.

With the arrival of 3G/4G technology, it is estimated that billion dollar investment will be landing in the private sector with creation of thousands of jobs and allied businesses.