Pakistan is set to hold long-awaited auctions for 3G, 4G network licences on April 23, a step the government projects will raise $2 billion (1 billion pounds) to boost foreign reserves.Officials said there had been scant interest in Monday’s bidding process and estimate Pakistan will raise no more than $850 million.
“The finance minister (Ishaq Dar) is very angry, so much so that he wants to call off the auction if we are so embarrassingly off target,” said an official on his team, who declined to be identified as he was not authorised to speak officially on the matter.
“This has happened because of an over enthusiastic IT Ministry which oversold an undercooked plan to its fiscal managers. It looks like heads may roll on this one.”Pakistan is the only major country in the region that still does not offer 3G services. Its neighbour, war-ravaged Afghanistan, switched to 3G services in 2012.
There are about 132 million mobile phones in use in Pakistan, a country of 180 million people, according to the Pakistan Telecommunication Authority (PTA).Pakistan’s telecommunications market was deregulated in 2004 and foreign firms such as Etisalat have invested heavily.
The Finance Ministry said in February that Pakistan would sell both the 3G and the more advanced 4G LTE Spectrum. Selling just 3G licences could raise $2 billion, and bundling them with 4G spectrum could generate between $4 billion and $5 billion, Finance Minister Ishaq Dar had estimated.
The 3G spectrum auction was expected to raise Pakistan’s gross domestic product by $8 billion and indirectly create up to 900,000 new jobs, a government-commissioned study by Plum Consulting said.
But when bidding closed at 4 pm on Monday, only four out of five cellular mobile companies operating in Pakistan had submitted bids and no new companies showed interest, sources privy to the bidding told Reuters.
Khurram Mehran, a PTA spokesperson, sent a statement saying “the response received from four existing cellular mobile operators of Pakistan is very encouraging and satisfactory.”Telecom companies Mobilink and Zong bid for 10 MHz. Telenor and Ufone both bid for 5 MHz.
Warid Telecom Pakistan, owned by the privately-held conglomerate Abu Dhabi Group, did not submit a bid, said a source in the company. Neither did Turkcell and Saudi Telecom Company, two foreign companies who had earlier shown interest.
“There are four available 3G blocks in 1800 MHz: two 10 MHz and two 5 MHz. The base price for 10 MHz block is $291 million and 5 MHz is $146 million,” said a finance ministry official close to Monday’s bidding.
“The auction is thus expected to go for $863 million, nowhere close to $2 billion.”Bids for 4G LTE licences were to start at $210 million. No operator has shown any interest.“It looks like 4G won’t fetch any money,” the finance ministry source said. “The disappointing bids are deepening the budget hole by almost $1.7 billion and are such a big hit the finance minister is ready to postpone the whole auction process.”
Spokesmen in the Finance Ministry, the IT Ministry and telecom companies taking part in the bid said they were not authorised to officially comment on the issue.The disappointing response will pile further pressure on embattled Information Technology Minister Anusha Rahman, who is overseeing the auction.
She drew criticism last month after appointing her husband to the Board of Directors at Ufone, one of the companies bidding for licences and partly owned by the government. He later resigned. – Reuters
Online adds: Meanwhile, with reference to the Reuters’ news story, a spokesman of PTA has denied assertions made as incorrect and baseless.The spokesperson said that the response received from four existing cellular mobile operators of Pakistan was very encouraging and satisfactory for the PTA.
The spokesperson said that it was entirely wrong to say that no cellular mobile operator had shown interest in 4G (1,800 MHz) as it could possibly be the writer’s own wish but not the fact.
It is also denied that representative of the Ministry of Finance was at the bidding. First, no bidding happened and second, the bids were received and processed by PTA only.Similarly, details of the bids of the operators, contained in the said story, were also found to be incorrect. As per the Information Memorandum issued by PTA, no operator could bid for 5MHz. The minimum slot for which bid could be submitted was 10MHz.
The spokesperson also said that PTA had already issued an official statement on April 14, 2014 stating that the demand was higher than the supply, therefore, auction would happen. Further, it was a matter of commonsense. Had there been less or even same demand from bidders/operators there would have been no reason to go for the auction on April 23, 2014 and bidders would have the spectrum straight away.
The spokesperson deeply regretted that a world-renowned news agency like Reuters had run a fabricated story on 3G/4G auction and had failed to seek the version of PTA, the sole body responsible for auction. PTA reserves the right to proceed for appropriate legal action against the Reuters. In fact, the auction process is progressing efficiently and transparently in accordance with the rules.