KARACHI, Jan 15: Pakistan is likely to grant three fixed-line licences by March for nationwide and long-distance phone calls under a policy to deregulate the telecommunication sector, a regulator said on Wednesday.

“We have prepared a final draft of the deregulation policy and within the next two to three weeks, this draft will be put forward for the cabinet approval,” an official at Pakistan Telecommunications Authority told Dow Jones Newswires.

“The government will grant these licences through an open auction with a minimum floor price,” said the PTA official, adding the policy is expected to be in place by March this year.

The policy will enable new telecom companies to compete with state-run Pakistan Telecommunications Company Limited (PTCL), the country’s sole fixed-line operator, which until December last year held a monopoly by law.

Pakistan is trying to attract investment to its underdeveloped telecommunication sector through deregulation. The nation’s fixed-line ownership is extremely low — at 2.4 lines for every 1,000 people at the end of 2001 — with PTCL owning 95 per cent of the business.

Analysts say there is a huge pent-up demand for telephone services, especially in the rural areas where the state monopoly did not develop elaborate infrastructure.

According to a draft of the proposed policy posted on the website of Ministry of Information Technology and Telecommunications, the government will also allow three local-loop, or limited frequency, fixed-line licenses in each of 13 regions nationwide. Private operators will be allowed to lease some infrastructure from PTCL.

“The operator must own a proportion of the transmission system and cables comprising its network,” the draft of the policy said. The operator must build 10 per cent of the total infrastructure in the first year of its operations and have 30 per cent of its infrastructure completed in the third year, said the paper.

Analysts say that due to the struggling telecom sector worldwide, the deregulation moves in Pakistan are not likely to attract much foreign investment in the near future.

“I think this is going to be a controlled deregulation if you are restricting the numbers of companies by offering only three licenses,” said Mohammed Suhail, research head at Investcap Securities. But industry sources say the policy to allow restricted entry of new players in the first phase bodes well for local companies, which are gearing up enter the market.

“I think this policy is good for (local telecom companies’) growth and will give us a chance to go into those areas which are not well served without fear of undesirable competition,” said chief executive of Telecard Company. Telecard plans to offer telephone services through wireless technology. Worldcall Ltd, a Lahore-based firm, has also laid fibre-optic cables for its upcoming foray into the fixed-line market, industry sources say.

According to the policy draft, the government will also offer at least two new cellular licenses through an auction. Currently, there are four cellular companies operating in Pakistan with a customer base of 1.6 million.—Dow Jones Newswires