Exclusive: Pakistan May Auction Four 3G Licenses and Two 4G Licenses

Government of Pakistan is likely to auction four 3G and two 4G licenses later this month in its planned spectrum auction, ProPakistani has learned.

Sources with direct knowledge of the final auction plan confirmed ProPakistani that there is a possibility of four 3G licenses – that will be auctioned on April 23rd 2014 — instead of three.

Move is aimed at equipping four operators with next-generation licenses to develop more competitive telecom market in Pakistan during post 3G era.

Revised Information Memorandum for Next-Gen spectrum auction had said:

The spectrum floor for the 2100 MHz may be reduced to 2×5 MHz for the auction stage depending upon the lot definition following receipt of Sealed-bid Offers.

According to this clause (Section 2.2.2 of IM dated March 17th, 2014), after sealed-bid offers, government may decide to auction 5Mhz blocks from 2100 spectrum, resulting into a total of four 3G licenses.

Spectrum Lots

According to the authorized and confirmed information, a total of four lots of 3G spectrum and 4G licenses will be auctioned, where two 4G spectrums are tied with 10 Mhz of 3G spectrums (meaning that two operators opting for 10Mhz 3G licenses must have to buy 4G licenses as well), while other two lots of 5Mhz from 2100 Mhz band will be auctioned through bidding.

Check below details for more clarity:

• Lot A:
  • One 3G spectrum of 10 MHz from 2100Mhz
  • One 4G spectrum of 10 MHz from 1800Mhz
• Lot B:
  • One 3G spectrum of 10 MHz from 2100Mhz
  • One 4G spectrum of 10 MHz from 1800Mhz
• Lot C:
  • One 3G spectrum of 5MHz from 2100Mhz Band
• Lot D:
  • One 3G spectrum of 5MHz from 2100Mhz Band

Possible Scenarios

Operators will be able to purchase any one lot (or more) from above four lots. If an operator is able to buy Lot A then it will be granted with 10Mhz of 3G spectrum along with 10Mhz of 4G spectrum as well.

Lot A and Lot B are bundled with 10Mhz blocks from each 2100Mhz and 1800Mhz bands, which means, buyer of Lot A and Lot B will have to buy spectrums from both bands for 3G and 4G.

Similarly one operator can also buy more than one lot, for example, an operator can buy Lot A and Lot C that will grant it 15Mhz of 3G spectrum and 10Mhz of 4G spectrum.

In another scenario, one operator can buy Lot C and Lot D to obtain 10Mhz of 3G spectrum.

Furthermore, in a more likely situation, two operators may end up with Lot A and Lot B while third operator may purchase Lot C and Lot D going to operator number four.

Another comprehensible scenario can be a possibility where one operator will buy Lot A, while another operator may end up buying Lot B and third operator may end up buying Lot C and Lot D.

By tying up 1800Mhz band with 2100Mhz band will ensure the auction of two 4G licenses.

If any operator ends up with 5Mhz of 3G spectrum then it will be able to offer next-gen services but with more challenging tasks. Such operators will have to deploy more cell sites to maintain the quality of services.

With this auction plan, four major players from Pakistan will be able to acquire 3G licenses.

Experts say that more 3G operators will only negatively impact the ARPUs and the economy of the country. However, there are others who opine that more 3G operators will mean more options for customers and hence better pricing with more competition amongst the operators.

Nevertheless, Pakistan’s telecom market is undergoing the most crucial and decisive phase of its history. Decisions made during next two weeks will shape the course of the industry for decades to come.

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