27.8MHz spectrum sale to raise over $1bn

Published May 27, 2021
The draft policy states that the PTA will auction 12.8 MHz paired spectrum in the 1,800 MHz band and 15 MHz paired spectrum in the 2,100 MHz. — AFP/File
The draft policy states that the PTA will auction 12.8 MHz paired spectrum in the 1,800 MHz band and 15 MHz paired spectrum in the 2,100 MHz. — AFP/File

ISLAMABAD: The government is looking to bag more than $1 billion by offering minimum spectrum for telcos in the upcoming auction for Next Generation Mobile Services (NGMS) Spectrum.

The document available with Dawn shows that the Advisory Committee for the release of NGMS Spectrum has approved the auction of 27.8 megahertz (MHz).

On the other hand, sources in the Ministry of Information Technology & Telecom (MoITT) said that up to 44MHz band was available in the system in Pakistan.

The meeting of the committee chaired by Finance Minister Shaukat Tarin approved the draft policy directives for the release of NGMS Spectrum in Pakistan, Azad Jammu & Kashmir and Gilgit-Baltistan, which will allow improved voice and 3G/4G internet services.

The MoITT will forward the draft to the federal cabinet for approval and after auction process will be initiated by the Pakistan Telecommunication Authority (PTA).

The draft policy states that PTA would auction 12.8 MHz paired spectrum in the 1,800 MHz band and 15 MHz paired spectrum in the 2,100 MHz.

The base price for 1MHz spectrum in 1,800 MHz is $31 million while the base price for 1MHz spectrum in 2,100 MHz is $29m.

The base price amounts to almost $832m if the four telecommunication companies do not compete for the spectrum. However, industry players have criticised the policy.

“If the government offers more than 40 MHz band, all the four telcos will easily buy between 10-12 MHz band at an affordable rate and focus on long-term investments to improve voice as well as broadband service,” a senior executive of one of the mobile companies said.

“At the same time there is no benefit for the government or the consumers if the additional and spare MHz band remains idle in the system and people continue to suffer from slow service,” the executive added.

Even the policy document said, “Demand for data services grew exponentially and in a short period of seven years, the broadband subscribers in the country increased from a mere 14m in 2014 to over 100m in April 2021.”

“This ever increasing reliance on wireless mobile broadband services necessitated the demand for availability of more spectrum and hence to meet the connectivity needs of the citizens of Pakistan.”

Under the current policy the government was offering 5MHz spectrum blocks in auction for the mobile companies.

After the policy is approved by the federal cabinet, PTA will issue an Information Memorandum (IM) specifying the detailed procedure of the auction, including eligibility criteria and steps for participating in the auction process.

The government has plans to finalise the auction process before June 30 this year.

Under the draft policy, spectrum fee and related mark-up will be in dollar denominated, however, the amount shall be paid either in US dollar or in equivalent to Pak Rupees.

The payment can be made either 100 per cent upfront or minimum of 50pc upfront payment, and the remaining to be paid in five equal instalments in five years with cumulative mark-up rate of one year LIBOR+3pc. The tenure of frequency assignment is 15 years.

Published in Dawn, May 27th, 2021

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