Telcos & PTA Expected to Decide on License Renewals by Tomorrow

Cellular Mobile operators are expected to appear before Pakistan Telecommunication Authority (PTA) on Tuesday (tomorrow) for renewal of their licences.

Islamabad High Court (IHC) disposed off a petition of mobile operators on the terms of license renewal and directed Pakistan Telecommunication Authority (PTA) to decide about license renewal applications by July 15.

Chief Justice IHC Athar Minallah, while hearing the case, asked mobile operators to appear before the PTA on June 25.

The court also observed that mobile companies can also file appeal after the PTA decision on their applications for renewal of licenses. The Court issued these directives following the consensus among the council of mobile operators and PTA.

Lawyer Hamid Khan and Lawyer Munawar Iqbal appeared before the court on behalf of mobile operators and PTA respectively. The IHC Chief forwarded the matter to PTA.

The cellular mobile licenses of Pakistan Mobile Communications Limited (ex Warid/Jazz) and Telenor Pakistan Limited (Telenor) were due to expire on May 25, 2019 and were due for renewal. The license of China Mobile Pakistan (CMPak Zong) is due for renewal on October 22, 2019.

However, Jazz and Telenor had approached the IHC to decide on the terms of license renewal in an equitable, fair and transparent way.

According to Jazz’s statement, they sought to have the license renewed as per the terms of its license and the telecom policy of 2015.

Cellular licences were issued by PTA to two cellular mobile operators i.e. M/s Telenor Pakistan and M/s Warid Telecom on May 26, 2004 for a period of 15 years, under the Mobile Cellular Policy, 2004, on payment of $291 million after auction.

Cellular licence of M/s Paktel Limited now China Mobile Pakistan (Zong) was also renewed by PTA under the 2004 Policy on October 23, 2004 for a period of 15 years on payment of $291 million.

In 2014, the government of Pakistan renewed the licence of the state-owned entity, Ufone, at $291 million through interest-free payment installment in order to maintain a level playing field. Telenor Group had recommended that upcoming licence of Telenor Pakistan and other operators be renewed under the same terms and conditions.

M/s Veon, one of the largest foreign investors’ in Pakistan sought predictable and transparent investment climate and licence renewal price of not more than $291 million.

On May 7, 2019 the federal cabinet approved policy for renewal of cellular Mobiles licenses for 15 years, of which the government has estimated to generate revenue of $1.37 billion. The government approved to renew licenses of two operators at $450 million each while the third operator would have to pay $470 million.

Later, the Ministry of Information Technology and Telecommunication issued policy directive to PTA and Frequency Allocation Board (FAB) for renewal of three cellular mobile licenses.

According to the policy directive, the renewal price for the right to use frequency spectrum included in the licenses being renewed shall be in accordance with per MHz price benchmarks from frequency spectrum auctions of 2016 and 2017 i.e. per MHz price for frequency spectrum in 900 MHz and 1800 MHz shall be USD 39.5 million and USD 29.5 million, respectively.

The tenure of the renewed licenses shall continue to be 15 years. Payment terms shall be 100% upfront or 50% upfront with remaining 50% on five equal annual installments on LIBOR+3%. The renewal fee shall be paid in US Dollars with the option to pay in Pak Rupee, which will be calculated at the market exchange rate applicable at the time of payment, as per precedence of earlier cellular licenses issuance/renewals.

However, telecom operators had approached the court and the government gave one month extension to mobile operators for license renewal.

The policy directive states, “The payment (100 percent or 50 percent upfront as the case may be) will be due on 25th June, 2019. In case, the spectrum is utilized till 25th June 2019 and requisite payment is not made, the proportionate amount will be charged, for the said period, in addition to any legal action as per the Act, Rules, Policy, etc.