Pakistan to Lose Rs. 32 Billion for Failing to Sell 5G Spectrum

The country is likely to face a shortfall of around Rs. 32 billion in non-tax revenue from 5G licenses, budgeted for the outgoing fiscal year 2023-24, due to non-materialization of the spectrum auction owing to economic and political challenges, sources told ProPakistani.

The government has budgeted Rs. 72.597 billion from 4G/5G licenses under the head of non-tax revenue for the current fiscal year 2023-24 against Rs. 50 billion budgeted for the last fiscal year which was later revised upward to Rs. 74 billion.

According to PTA; “License renewal fees from cellular mobile operators are receivable in installments as per license terms and conditions. Pakistan Telecommunication Authority (PTA) has so far received Rs. 30.94 billion against its budgeted amount of Rs. 40.90 billion for the financial year 2023-24.”

However, the Authority did not mention the remaining amount of Rs. 32 billion, as shown in the budget document.

Sources revealed that serious efforts were made during the tenure of previous governments to initiate the process and launch of 5G services in the country, however, political environment and economic challenges delayed the process.

Sources said that sufficient spectrum was available to be offered for any future spectrum auction for NGMS in Pakistan; however, cellular mobile operators (CMOs) took a cautious approach due to economic challenges and uncertainty in the market regarding the launch of 5G.

Other impediments include low handset and optic fiber cable (OFC) penetration, low average revenue per user (ARPU), and rising operating expenses (OPEX) coupled with high taxation to launch 5G services in the country.

International projections suggest that by the end of 2026, 5G will attract 3.5 billion subscriptions, thereby generating approximately 45 percent of the world’s total mobile traffic data.

However, sources added that the 5G auction seems a challenge to be completed in the current calendar year and the government would require approximately eight to ten months in line with the Public Procurement Regulatory Authority (PPRA) after the issuance of the policy directive to complete the process of the 5G launch in the country.

First, the government will communicate to all stakeholders that it is going to launch 5G and will prepare a draft policy directive.

The policy will be approved first, by the Economic Coordination Committee of the Cabinet (ECC) and then by the federal Cabinet to be chaired by the Prime Minister. The approved policy will be shared with the PTA and the Frequency Allocation Board (FAB). The FAB will require specifying frequency bands, while the PTA will conduct the required process.

After getting the policy directive for the auction of 5G from the Ministry of Information Technology and Telecommunication, PTA will issue an RFP (Request for Proposal) for hiring consultancy services for the auction. It will take two weeks while one additional week will be required for the advertisement and process through Embassies in countries such as the US, the UK, etc.

As per the PPRA rules, it will require 30 days to complete the process while reaching this point and a total of two months will be required.