PTA Imposes Rs. 1 Million Fine on a Tower Sharing Company

Pakistan Telecommunication Authority (PTA) has imposed a fine to the tune of Rs. 1 million on edotco Pakistan Private Limited on failure to fulfill its obligations its license.

The Authority has further ordered to pay the fine within one month from the date of receipt of the order, and in case of non-compliance, further action will be initiated under the applicable law.

PTA panel headed by its chairman, Maj. Gen. Amir Azeem Bajwa (R), heard a show-cause notice issued to edotco Pakistan Private Limited for discontinuation of tower facility and decided to impose a fine of Rs. 1 million rupees and termination of its services with immediate effect.

According to PTA’s decision, edotco Pakistan Private Limited (the licensee) is engaged in the business of Telecommunication Towers Facilities in Pakistan pursuant to non-exclusive licenses dated 8 July 2015 (the license issued by the Authority) to establish, maintain, lease, rent, and sell Telecommunication Tower Facilities in Pakistan on the terms and conditions contained in the license.

As per license, the licensee is authorized and mandated to establish and maintain the following telecom infrastructure facilities to lease, rent out or sell to Telecom Operators licensed/registered by the Authority on mutually agreed terms strictly keeping in view their license/license conditions: (a) Telecom Towers (b) Such other Telecommunication infrastructure as the Authority may, by regulation, require.

Pursuant to license condition, the licensee is not allowed to discontinue, terminate or wind up its telecommunication facilities unless the Authority’s written approval to such discontinuation has been obtained.

As per letters dated 22 July 2020 and 24 July 2020 of the licensee it has been noticed that as a consequence of a commercial dispute between the licensee and Wi-Tribe Pakistan (Pvt.) Limited, local loop license holder, tower facilities provided to the Wi-tribe Pakistan (Pvt.) Limited has been disconnected/terminated. Thus, as a result thereof, users are being affected due to the non-provision of telecommunication services.

Upon failure of the licensee to comply with license condition by discontinuing/terminating tower facilities to Wi-Tribe without the approval of the Authority, a show-cause notice dated 21 August 2020 was issued to the licensee requiring it to remedy the contravention by adhering to license conditions in the best interest of the consumers and submit a compliance report within three working days of issuance of this Show Cause Notice and also to explain in writing, within thirty (30) days of issuance of this notice as to why the license should not be suspended or terminated.

In compliance with the show cause notice, the licensee submitted an interim reply and showed obscurity of the relevancy of the provisions of the regulatory laws mentioned in the show-cause notice. The licensee further portrayed that the Wi-tribe has filed a declaratory suit in Civil Court for restoration of services, and it has filed a winding-up petition as a consequence of non-payment of the service fee before Islamabad High Court on the subject matter of SCN.

Subsequently, the licensee filed a detailed reply to the show-cause notice and the main contentions of the licensee are as under: The licensee entered into Master License Agreement (the agreement) with Wi-tribe on 28 June 2016 as effective from 24 March 2026.

Pursuant to the agreement, the licensee granted space to Wi-tribe on its towers across Pakistan. In accordance with the Agreement, Wi-tribe is under obligation to make payment of Service Fees in consideration of the allocated space. However, Wi-tribe has stopped making payment of Service fees since September 2017, in breach of terms of the agreement.

These violations were repeatedly brought to the notice of Wi-tribe and the Wi-tribe did not pay any heed thereto. Wi-tribe has not paid the services charges since September 2017. As a consequence, the amount owed by Wi-tribe to date accumulates to more than Rs. 1 billion. This amount is continuously increasing as the licensee is still providing services to Wi-tribe.

Despite the continued breach of the agreement by Wi-tribe, the licensee claimed that it had shown immense patience and indulgence prior to exercising its right to terminate its services under the agreement. As a gesture of good faith, the licensee consistently constrained itself from exercising its remedy under the agreement for two years, with a view to:
(a) facilitate Wi-tribe
(b) sustain the contractual relationship between the parties.

The licensee also expressed that it had revised the payment plan, which includes the following:

  • An enormous discount of 37.5 percent to the service fees.
  • Extension in the payment/credit period to three months from one month.
  • Agreeing that the service fee due from September 2017 to 2018 is to be paid in installments.

The licensee sent a demand letter to Wi-tribe in July 2019 and then finally on 12 June 2020 for the payment of the dues/ services charges with intimation to the Authority as well. However, the same was ignored by Wi-tribe. Hence, the licensee served a termination notice whereby initially, on 23 June 2020, services were terminated on 21 single tenanted towers sites as per terms and conditions of the agreement.

The Wi-tribe responded to the Notice of termination vide its letter dated 1 July 2020 admitted thereof the liabilities to the extent of Rs. 550 million.

The licensee further disclosed that instead of discussing the payment delay and the payment of outstanding dues, Wi-tribe approached the Civil Court and filed Civil Suit for Temporary and permanent injunction seeking a restraining order against the termination service, whereas, the agreement provides for arbitration being the only recourse for dispute resolution. The Civil Court vide order dated 9 September 2020 upheld the licensee’s stance, and all the orders, including the restraining order passed in favor of Wi-tribe, stand abated.

The licensee, while responding, submitted that the reference to the condition of the license in respect of the termination of service to Wi-tribe is completely misconceived. In this regard, the licensee stated that the condition of the license envisages an event where the operator is closing down its business or going into wind up, and the licensee is not wind up or closing down its business, it has only terminated provision of services to Wi-tribe on few of its sites on the account that Wi-tribe has failed to pay outstanding service fees to licensee.

The licensee also highlighted clause 8.2(d)(ii) of Appendix B of the Pakistan Telecommunication Authority Rules, 2000, which is reproduced as under:

The licensee shall not have any obligation under this to supply any apparatus, provide any telecommunication service, or permit the continued connection to the licensed system of any telecommunication apparatus or telecommunication system if the person requesting the same:
(ii) is or is likely to become, in breach of any contract with the licensee for those purposes or is in default of any liability owed to the license in respect of that license.

The licensee stated that partial services of Wi-tribe were terminated as a result of continuous default in paying the services fees and other dues under the agreement. Wi-tribe has also acknowledged its debt to the licensee vide Amendment No. 2 to the agreement and agreed and assured to pay the outstanding debt to the licensee as it stood on 1 September 2018. Wi-tribe has further admitted its further liabilities in its letter dated 1 July 2020.

The licensee also stressed that relying on Amendment No. 2 of the agreement, it allowed Wi-tribe to continue its Tower Facilities. However, Wi-tribe again failed to make payment of the service fee, under the terms and conditions of the agreement and Amendment No. 2 thereof. The licensee further emphasized that Wi-tribe’s default with regard to its financial obligation has been so egregious that as of 10 September 2020, the outstanding amount for the service fee stands at more than Rs. 1 billion.

The licensee also articulated that it, neither in its license nor in any provision of the Act or the Rules, has any liability towards the users/consumer. The liability towards users and consumers rests with Wi-tribe further to the terms of its license. Keeping the concerns of the consumer’s licensee has been trying to sustain Wi-tribe for the past 3 years, which is no more viable for the licensee.

The licensee stated that it has always strived to do business in an ethical manner, but the actions of the Wi-tribe have been highly unethical. The basic monthly cost of maintaining the passive telecommunication towers on which Wi-tribe is the tenant is approximately Rs. 50 million per month, and if we continue to provide free services to Wi-tribe then we would be at risk of incurring heavy losses, which will gravely affect the viability of the licensee’s business.

In addition, it will also adversely affect services being provided to other MNOs, who in turn are providing services to millions of consumers in Pakistan.

The licensee objected to the contraventions raised in the SCN and stated in this regard that they are completely vague, groundless, and unjustified.

According to the PTA decision, the fundamental question before the Authority is to determine that whether the termination of service by the licensee to Wi-tribe pursuant to failure to comply with Agreement by Wi-tribe is within the framework of prevailing regulatory law/rules/ regulations and the terms and conditions of the license or otherwise.

The discontinuation of telecommunication tower facilities by the licensee was a consequence of default by telecommunication services provider (Wi-tribe) to abide by the agreement to pay the outstanding dues, and such discontinuation directly resulted in the discontinuation of telecommunication services of the service provider as consequence whereof the consumers were affected.

Knowingly that discontinuing the telecommunication tower facility would result in discontinuation of the services of the service provider, the licensee failed to keep into account clause 6.2.1 of the license of the service provider, which provides for the framework of discontinuation of service, which the licensee under Article 1.1. I of the license is bound to strictly keep into account prior to discontinuation of tower facility.

Clause 6.2.1 of the license of the service provider is as under:

The licensee shall not discontinue providing the licensed services or category of Licensed services unless:

  • The licensee gives the Authority and affected consumers at least 90 days prior notice of such discontinuation
  • Authority’s prior approval to such discontinuation is obtained”

PTA order stated that the licensee has failed to fulfill its obligations under the clause of its license, therefore, Authority imposes a fine to the tune of Rs. 1 million to be paid within one month from the date of receipt of this order.