Major global telecom operators vying for 3G licences in Pakistan

At least nine telecommunication companies including four world majors are likely to participate in bidding due by end-March for third and fourth generation telecom licences in Pakistan, raising hopes for a better foreign exchange yield.

An advisory committee on 3G/4G/LTE led by prime minister’s adviser on finance Abdul Hafeez Shaikh was informed on Thursday that British Vodafone, Japan’s DoComo, AT&T of United States, QTel of Qatar and even Roshan Telecom of Afghanistan were preparing for bidding to be new foreign entrants in the country’s fast growing telecom industry.

The information, based on market intelligence, was put forward by Ministry of Telecommunication and Pakistan Telecommunication Authority (PTA).

The advisory committee was also informed that among the existing players Ufone, Mobilink and Zong were keen to get the new licences to be available for 15 years. Another player Warid was not in a position to independently vie for the future licence due to financial constraints but was in contact with a leading Malaysian telecom firm for a joint bid, according to market intelligence.

Qbee another firm that currently operates wireless and internet services in Pakistan and Bangladesh was also reported to be making contacts with some market players for a joint bid.

The advisory committee, said these sources, discussed a proposal to appoint consultant or a consortium of consultants to assist the government in transaction structure and bidding process but was informed that this could delay the transaction in view of procurement rules while the government was interested in over $800 million sale proceeds during the current financial year.

The finance ministry was of the view that the government could exercise its right to bypass procurement rules to reduce time for the appointment of consultants because that would help the government to maximise sale proceeds. The committee members remained divided over the issue, Dr Abdul Hafeez Shaikh said the decision would be made in a couple of days after consultations with the ministry of law.

In the meanwhile, the PTA was directed to enhance its coordination with the major telecom players for wider participation in the bidding process. The committee decided to appoint a media consultant for the transaction. The committee also considered replies to objections raised by cross-party members of the senate over the base price fixed by the PTA for the bidding. It also decided to issue an international advertisement for competitive bidding.

The government plans to auction three 3G and one cellular licence for 1900/2100 MHz (3G/4G/LTE) band and 800 MHz Band. The base price for 3G licence to be effective for 15 years has been set at $210 million while the base price for cellular licence for 8 years has been set at $155 million.

Likewise, the earnest money to qualify for the bidding has been set at $31.5 million for each bidder of 3G and $23.25 million for cellular license. The spectrum capacity allocation has already been fixed for three 3G licences.

The bidders would be required to start their offers from the base price fixed by government with each increment of at least $2 million multiples. The successful bidder would be required to deposit 50 per cent of the auction price within 30 days of the auction and remaining 50 per cent in five equal instalments. The bidder would be allowed to launch its operations on 100 per cent payment of bid money.

The senators had objected to the bid price saying it was too low given the fact that cellular companies had paid $291 million per license in 2004 for 2G services (GSM), now considered an obsolete technology. The advisory committee was, however,
told that base price did not mean a sale price that would go up on competitive bidding and reminded the senators that the base price for 2G licenses was set at $61 million that had increased to $291 through bidding.

The meeting was informed that base price for cellular licence was set at $155 million because it was being issued against the remaining 8 years period of the defunct Instaphone instead of other cellular licenses that were for 15 years. Even the bidding result for one GSM license would also go up.

The committee was informed that base price was arrived at after taking into consideration the 2004 auction result of 2G (GSM), expected service revenues, subscriber growth, economic growth, per capita income, political situation and population of the country.

(C) Daily Dawn