ISLAMABAD: Cellular operator Jazz on Friday approached the Islamabad High Court asking for “clarity” on the terms of its licence renewal that it says should be done “in an equitable, fair and transparent way.” The license in question belongs to Warid, which was acquired by Jazz in 2015.
In a statement, the company said that “this measure is being taken to provide uninterrupted telecom, broadband, and mobile financial services to its 58 million customers, and to ensure continuity of investments in digital infrastructure sector. Jazz is working within the country’s telecom policy framework to protect the interests of foreign investors.”
Jazz maintained that it sought to have the licence renewed as per the original terms as well as the Telecom Policy of 2015. The licence was issued at Rs16.8 billion in 2004 ($291 million equivalent) and is now worth Rs41.4bn ($291m).
Cellular operator will be unable to continue operations beyond May 25 without renewal or stopgap measure
Two mobile operators - Telenor and Warid - were issued licences through an auction in 2004 both of which need to be renewed after 15 years. According to a source in Jazz, who did not wish to speak for attribution considering the sensitivity of the matter, the licence stipulates that the telecom operator is entitled to renew it at the same dollar price at which it was acquired.
The licence also requires the renewal process to have been initiated almost 27 months ago, according to the same source, but Jazz management has been unable to get a response from the government about how the process will proceed.
“There is no clarity on how the renewal will happen,” the source tells Dawn. The Pakistan Telecom Authority is expected to issue an information memorandum which details the price and process through which the renewal will happen.
The memorandum operates like a tender document, but the source tells Dawn that despite repeated follow-up over the past six months, and the approaching deadline of May 25 when the license is set to expire, the document has still not been issued.
“Jazz cannot operate beyond that date without renewal,” says the source, adding that further delays in the process could trigger disclosure clauses for the company which is obliged to inform its shareholders via Nasdaq if there is a risk to business continuity. Jazz is owned by Veon, which is listed on Nasdaq. “Renewal of the licence is a legal obligation unless there is a breach of contract,” the source informs.
Dawn has learnt that the government is considering a sum of $450m for the renewal, though this demand has not been formally communicated to Jazz. The figure apparently has been calculated using the spectrum auctions that happened in 2016 and 2017 as a benchmark.
The case filed in the Islamabad High Court asks to now clarify the terms on which the licence renewal should take place, keeping in mind the legal obligations on both sides contained in the licence agreement.
In its official statement released to the media, the company claims that the telecom industry in Pakistan has among the world’s lowest call rates and Jazz is one of the highest taxpayers in the country. The company said that the digital backbone of Pakistan was dependent on the telecom industry’s ability to expand its services, which requires a predictable investment environment, and vowed to remain firm in its commitment to advance its digital revolution.
The PTA spokesman did not take calls seeking comment, but a source in the IT ministry told Dawn on condition of anonymity, that the prime minister has formed a five-member committee headed by IT Minister Khalid Maqbool Siddiqui to take up the matter. He further said there is a likelihood that the matter will be taken up in the forthcoming cabinet meeting on Tuesday.
Published in Dawn, May 4th, 2019