Mobilink-Warid Merger Further Diminishes Govt’s 3G/4G Auction Plan

Yesterday’s merger of Mobilink and Warid has further thrown a wrench into government’s plan of going for the remaining spectrum auction as, after this new development, there remains scant chance to complete the process in near future, revealed background interviews of telecom experts.

While operators were already reluctant to go into upcoming 3G/4G auction, this new development has only added more hindrance in government’s plans.

Telcos Clearly Tell PTA about Not Participating in Auction

Cellular operators have informed the government in black and white that they are not going to participate in the auction process.

In a joint letter signed by telecom operators including Mobilink, Telenor, Ufone, Warid and Zong, which was sent out to Pakistan Telecommunication Authority (PTA), a copy of which is available with the ProPakistani, states that the Cellular Mobile Operators (CMO) had committed major investment in the NGMS auction held in April 2014.

During the auction process, it was assured by the government that the major challenges faced by the industry would be addressed on priority basis.

“However, we regret to inform that all the promises made during the auction process remain unfulfilled till date,” the letter states.

On the contrary, in fact, the industry problems have increased manifold in the post auction scenario on account of adverse changes by the government in taxation, security related compliance and other allied matters.

Letter further said that since telecom policy is also in the making for a while now and some of critical ancillary matters such as licensing framework and other spectrum related rights and obligations are still not clear, it will be hard for operators in making an informed decision for investing in the sector through spectrum auction.

According to the letter, the problems faced by the industry have time and again been shared with PTA, Ministry of Information Technology, and other concerned authorities including right of way problems faced by the industry, minimum tax at rate of 8 percent, taxation on data services, industrial undertaking for cellular mobile industry, elimination of reduced rate customs duty benefit at import stage, and imposition of sales tax on sales tax on supply of SIMs and other allied matters through several communications.

“We through this letter once again want to clarify that it might not be possible for the existing CMOs to commit any investment in the spectrum auction unless our problems are addressed on priority basis”, said the official letter.

The industry raised the issue of external interference due to jammers installed in different jails across Pakistan and communication in this regard was shared with the PTA via an industry letter dated April 30, 2015.

It was clarified during the consultation process that expression of interest in auction and technical consultation is subject to commercial viability of any such initiative.

And Now Mobilink-Warid Merger

The situations became further worse for the government after Mobilink merger with Warid. Mobilink will now not need to participate in the upcoming 4G licence while Zong is already carrying both 3G/4G licenses.

And for Telenor and Ufone it might not be a viable option to go for 4G license, said industry experts.

Sources further confirmed that Interconnect Communication, a U.K based firm, was hired by the Pakistan telecommunication Authority (PTA) to assess market demand for 3G/4G spectrum. The firm has held initial meetings with some cellular companies, but did not get satisfactory input.

The government budgeted Rs 56 billion for 2014-15 and showed it as realized in the revised estimates for 3G/4G auction that never took place. For 2015-16, the revenue from 3G/4G auction has been inexplicably raised to Rs 65 billion.

Finance Ministry is allegedly stressing the Ministry of Information Technology and Pakistan Telecommunication Authority (PTA) to expedite efforts for early auction of the remaining spectrum. However background interviews of different telecom operators revealed that market is not ready for the auction due to heavy investment after the early 3G/4G auction, SIMs verification through biometric system and heavy taxation on mobile internet and data services.

PTA has planned to hire a second consultant for marketing to attract new investments in the spectrum auction. They would further require effective marketing to ensure participation of new entrants in the auction in accordance with the scope provided in the RFP. However the consultant against the service is yet to be finalized. According to the conditions the consultant will work till the completion of auction process.

    • Well If they want to invite/attract new operators then they should sell to other operators in a lower price…Because new operators would have to set up all equipments ,offices…etc….But I don’t think thats going to happen :-(

  • We need more mobile operators in Pakistan after this merger.
    Please Govt launch a new auction to provide these companies
    Vodaphone (UK) 2nd
    Turkcel (Turkey) 26th
    Orange (France) 11th
    and MegaPhone (Russia) 27th

  • Hmm… the timing of this letter n the anouncement of removal of taxes seems to be interconnected…. is the government trying to lure the telecos in?
    Also, what would happen if the government does solve the telecos problems? Will mobilink/zong go for the added 4g spectrum as broader spectrum will benefit them…. or will ufone or telenor try to enter the 4g market?

    • Zawyar Ur Rehman

      Well I am not a tech geek But here is my point of view

      The amount of customer Mobilink has …Warid’s 4g spectrum won’t be enough…But probably They might port all of warids 2g user to their allocated 2g spectrum and then give 4g on 1800 MHZ but I dont really know how much MHZ warid originally had on 1800 MHZ …I think it would be enough to keep the 4g service running for Warid and Mobilink Users Combined ….

      Well for telenor and ufone they might go for it….

      And AFAIK their was 850 MHZ 4g spectrum also being offer( I read somewhere)

      So mobilink could do Carrier Aggregation LTE (Google It)

      But this is Pakistan Bro…Jab tak chalt hai chalo..

      • I think story is reverse than this. Warid had 8.8 MHz spectrum in 1800 MHz block further deep there is merely 5 MHz spectrum available for LTE services which was using by warid earlier. And due to narrow spectrum warid was facing problem of low speed in big cities Like Karachi, Lahore and Faisalabad where large number of users connect to a single cell site in real time. Same like Telenor and Ufone are facing low 3G speed issues in peak hours in same cties due to 5 MHz spectrum.
        Keeping this in mind it is clear that it is impossible for Mobilink to provide LTE services to its 45 million customers with this narrow spectrum.
        On the other side Zong with its approximately 25 Million customers and 10 MHz spectrum for both 3G/4G, providing much better speed to its users.
        So if Mobilink want to be in race of LTE, remaining license of LTE is must needed for them.

  • Shocked at reading this from ProPakistani. Waird tried a failed attempt at hosting lte on its own network with limited coverage. The reason for this was that they were only using 1/3 of their network capacity and therefore could rehost lte on there. Now with mobilink over used network it will simply spill over to the warid network and it will not be possible to run LTE for mobilink and waird.

  • I would say Govt. is a temporary party the permanent stakeholder is PTA and they are not supportive at all only earning money but not facilitating Operators.

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