The Federal Cabinet is likely to approve the policy directive for auction of next-generation mobile services (NGMS) spectrum in Pakistan on Tuesday for the improvement of mobile broadband services, through which the government has estimated to generate over one billion rupees in revenue.
Prime Minister Imran Khan will preside over the cabinet meeting to consider ‘Policy Directive for the auction of NGMS spectrum in the country,’ drafted by the Ministry of Information Technology and Telecommunication.
According to the draft policy, a copy of which is available with Propakistani, the spectrum auctions for NGMS in Pakistan were conducted in 2014, 2016, and 2017, respectively, under the policy directives issued by the federal government of Pakistan.
Subsequently, the demand for data services grew exponentially, and in a short period of seven years, the broadband subscribers in the country increased from a mere 14 million in 2014 to over 100 million in April 2021.
A significant surge in demand for broadband services has been witnessed, particularly during the COVID-19 pandemic. This ever-increasing reliance on wireless mobile broadband services necessitated the demand for the availability of more spectrums to meet the connectivity needs of the citizens of Pakistan.
It further stated that after considering the recommendation of the Auction Advisory Committee (constituted by the Federal Government dated 1st October 2020, amended 24th March 2021) and based on the inputs from consultant and Pakistan Telecommunication Authority (PTA)/ Frequency Allocation Board (FAB), the Federal Government in the exercise of powers conferred under Section 8(2) of the Pakistan Telecommunication (Re-organization) Act 1996 (Amended 2006) hereby issues the following policy directive for auctioning the available radio frequency spectrum in 1800 MHz and 2100 MHz for compliance by Pakistan Telecommunications Authority:
- A transparent, competitive process shall be formulated by the PTA for auctioning 12.8 MHz paired spectrum in the 1800 MHz band and 15 MHz paired spectrum in the 2100 MHz.
- PTA will issue an Information Memorandum specifying therein the detailed procedure of the auction, including eligibility criteria and steps for participating in the auction process. The auction will accordingly be conducted by PTA in minimum possible time after issuance of the Policy Directive by the federal government.
- The spectrum assignment will be “Technology Neutral” and usable for all existing and upcoming advanced generations/technologies, within the applicable policy framework of the Government of Pakistan.
- For the purpose of harmonization and to ensure optimal utilization of radio frequency spectrum, PTA/FAB shall endeavor to provide each CMO with the opportunity to acquire such additional spectrum that will enable it to hold, in total, spectrum in multiples of standard 5MHz paired spectrum blocks.
- Post spectrum auction, all CMOs will be required, within 1 x month, to comply with the rationalization plan as may be issued by the PTA/FAB to ensure the optimal utilization of contiguous spectrum holdings in 1800MHz band and 2100 MHz band, respectively.
- The base price for the 2×1 MHz (1 MHz paired) spectrum in 1800 MHz is $31 Million while the base price for the 2×1 MHz (1 MHz paired) spectrum in 2100 MHz is $29 Million, respectively.
- Existing CMOs and New Entrants are eligible to participate in this auction subject to a spectrum cap of 40 percent in complete 1800 MHz band.
- transactions related to Spectrum Auction i.e. Spectrum fee and related markup shall be US Dollar-denominated, however, the amount shall be paid either in US Dollar or in equivalent Pak Rupees.
For the purpose of conversion, the National Bank of Pakistan TT selling rate prevailing on the date preceding the date of payment shall be used. Payment terms shall be as under:
- Full upfront payment (100 percent)
- Minimum 50 percent upfront payment, while with the remaining to be paid in 5 equal installments in 5 years with cumulative mark-up rate of one year LIBOR+3 percent.
- Moreover, if the auction winner intends to pay the remaining balance liability on account of the initial spectrum fee at any time before the end of 5 years, it would be acceptable and without any pre-payment penalties.
However, mark-up at the rate LIBOR + 3 percent shall be payable on the balance amount till the date the final payment is made.
A new license will be issued to successful bidder using the auctioned spectrum. The tenure of frequency assignment will be 15 years.
Provisions for Spectrum Trading/Sharing as per the approved regulatory framework for such sharing/trading will be incorporated in the licenses. Further terms and conditions relating to enhanced coverage, enhance Quality of Service (QoS), etc., shall be incorporated by PTA to enhance mobile broadband proliferation in the country.