Anusha Rehman, Minister for State, Ministry of Information Technology and Telecom, yesterday held a press conference to brief the media about government’s plan for auctioning 3G and 4G spectrums next month.
Minister said that her government has taken all possible measures to accelerate the development of ICT Sector in Pakistan. She said that telecom sector had been neglected in the past depriving the people of Pakistan from latest technologies and efficient modes of communication.
It maybe recalled that previous government had tried to auction 3G licenses, however, those efforts could not be materialized due to several reasons.
Anusha Rehman said that after taking the charge of her office, one of the priorities was the introduction of latest mobile services in Pakistan so that broadband proliferation could be accelerated.
The process of auctioning the spectrum for latest technologies was immediately rolled out by formation of Auction Advisory Committee headed by the Finance Minister and comprising of Minister of Science & Technology, Minister of State for IT, Secretary IT, Secretary Law & Justice, Secretary Finance, Chairman PTA and other senior officials of the Ministry.
The Ministry of IT developed a Policy Directive in this regard which was deliberated upon by the Advisory Committee. The recommendations made by the Committee were submitted to the Prime Minister for approval.
After the Prime Minister’s approval, Policy Directive was issued to PTA on 7th October 2013.
According to the Directive, PTA was entrusted to appoint consultants of international repute to undergo the auction process. Moreover, there was a provision in the Policy Directive that it could be reviewed on the recommendations to be made by the consultants after having in depth analysis of the market.
Anusha briefed the journalists that PTA procured the services of one of the best consultants, namely M/S Value Partners Management Consulting Ltd. The firm has a vast experience of undertaking consultancy assignments around the globe.
Ministry of IT and PTA also held consultative sessions with the existing mobile operators to seek their feedback and suggestions.
The Consultants, after undertaking necessary exercise, gave their recommendations to the Advisory Committee which required certain amendments in the Policy Directive earlier issued by the Ministry.
In the light of the interaction with the Industry analyst, experts, cellular mobile operators and consequential recommendations of the Advisory Committee, the Prime Minister of Pakistan accorded approval for the final Policy Directive.
According to Anusha, the salient features of the Directive are as follows:
- Auctioned spectrum:
- 3x10MHz paired spectrum in 1.9/2.1GHz frequency band
- 2×10 MHz paired spectrum in 1800MHz frequency band
- 7.38 MHz paired spectrum of defunct instaphone license in 850MHz band for new entrants only.
- Base Prices:
- USD 295 Million for 10MHz paired spectrum in 1.9/2.1GHz frequency band.
- USD 210 Million for 10MHz paired spectrum in 1800 MHz frequency band.
- USD 291 Million for 7.38MHz paired spectrum in 850MHz frequency band.
- Payment Options:
- Full upfront payment; or
- Minimum 50% upfront payment, while remaining to be paid in 5 equal installments in 5 years with interest rate at LIBOR + 3%
Anusha said that inclusion of 1800MHz band was exclusively done to catalyse the deployment of 4G in Pakistan. She further explained that spectrum in 850MHz will give incentive for new entrants in Pakistan and will certainly foster competition.
The draft Information Memorandum (IM) was published by PTA on 25th February 2014. Comments were solicited from the stakeholders on the draft IM by 10th March 2014.
Various stakeholders, including existing CMOs, submitted their comments on draft IM within the due date. The comments received were mainly related to extension of date for submission of bids, Quality of Service & Roll Out obligations, some clarifications regarding Payment Terms, requirement of Bank Guarantee and National Roaming & Infrastructure Sharing.
The Advisory Committee analysed the comments of the stakeholders and made some recommendations which were submitted to the Prime Minister for approval. However, the Committee has categorically advised PTA to watch the interest of the consumer in terms of Quality of Services which should be in line with the best international standards.
The Prime Minister approved the following recommendations:
- The Auction will be held on 23rd April 2014
- A new license will be issued to the Auction Winner for Next Generation Mobile Services, with similar terms and conditions as of previous license and additional terms and conditions/ amendments will be spelled out as an addendum by PTA.
- The Financial Transactions will be US Dollar denominated and the amount can either be paid in US Dollar or equivalent Pak Rupee.
- If the Auction Winner intends to pay the remaining balance amount before the end of 05 years, it would be acceptable without any pre-payment penalty.
- A late payment additional fee at a rate of 2% per month on the installment due or part thereof from the due date till paid shall be levied on the licensee.
- The License shall be suspended/terminated in case Licensee fails to make a payment.
- In order to give certainty to the bidders, it was recommended that no related auction will be carried out for 18 months from the date of auction. However, for any spectrum which remains unsold from this auction, PTA retains the right to hold or dispose of the same as deemed appropriate.
Anusha said that the auction process is on track and transparency has been ensured.
The Government of Pakistan, PTA and Consultants are very confident that the auction will receive strong support and participation from both the existing and prospective telecom operators.