ISLAMABAD:
The government approved the sale of additional spectrum in the 2,100 megahertz (MHz) band on Wednesday, modifying the conditions of the sale in a way that would irritate three telecom titans. The frequency will be auctioned off for 10 years and could fetch as much as $96 million for each 5 MHz sold.
According to a statement released by the Ministry of Finance, the Spectrum Auction Advisory Committee unanimously voted to proceed with the auction of the 2,100 MHz band in 5 MHz bandwidth for 10 years utilising the existing consultant’s report at net present value.
The 5 MHz band was put up for auction by the previous administration for a 15-year period at a cost of $29 million per MHz. The three telecom providers also had their licences extended for a further 15 years at this price.
According to a representative of a telecom operator, the spectrum auction committee only provided 2,100 MHz for a duration of 10 years, which would obviously favour one company unfairly.
He said, “It is discriminatory, and the telecom providers may object to the action.
Finance Minister Miftah Ismail, the head of the Auction Advisory Committee, has a different viewpoint.
No telecom operator purchased the 2,100 MHz band from the federal government, leaving “no choice but to adjust the conditions,” according to the finance minister, who noted that the 1,800 MHz band had been offered along with it.
The government could have chosen to lower the cost or the length of the licence, and “we decided for the shortened duration of 10 years,” he continued.
At least two to three 5 MHz spectrums will be made available to the business, according to the minister.
The earnings from the sale of the two spectrums are anticipated to bring in $96 million to $192 million for the government.
The government is working to strengthen mobile broadband connections in Pakistan, according to the finance minister, since the industry has made significant contributions to the nation’s growth.
For seven years, Telenor Pakistan requested 5 MHz of spectrum in the 2,100 band.
According to the finance ministry, the advisory group received a briefing on supply and demand as well as PTA recommendations for the distribution of spectrum for Pakistan’s Next Generation Mobile Services (NGMS).
It was also mentioned that the country’s 4G penetration was rising, which was advantageous for the growth of IT infrastructure.
The telecom sector has highlighted concerns about billing license and spectrum fees in dollars when they generate income in rupees.
The sector is going through hard times and is currently searching for methods to raise the pricing of its packages and services in response to a decrease in the value of the rupee, which has raised their costs.
According to a briefing presented to the media last week by one of the industry’s participants, the telecom sector would go from a net profit of $188 million in 2021 to a deficit of $287 million by the end of the calendar years 2022 and 2023 as a result of the weakening economy.
The telecom sector asserts that it has been facing significant difficulties and that its survival is now in jeopardy. The regulation forbids the telephone industry from raising its prices.
Pakistan has the lowest average revenue per user (ARPU), which has dramatically decreased.
In such a setting, the telecom industry is on the verge of a situation in which some foreign telecom investors are seeking ways to leave Pakistan.
The sector demands the removal of the 100% cash margin restriction on the import of practically all telecom and IT equipment. Additionally, it states that the SBP’s previous clearance is no longer necessary in order to obtain Letters of Credit for the import of any technical apparatus or equipment.
The telecom industry has been highly taxed by all governments, which has an impact on its operations.
In the Finance Bill 2022, the government also increased the regulatory tariff on imported optical fibre cable from 10% to 20%.
Despite making progress in the last several years, according to industry leaders, Pakistan still trails behind in terms of the four technological enablers: broadband, IoT, Cloud, and AI 4G. The current information technology boom will come to an end due to the stagnant subscriber base.
International investors are discouraged from making investments in companies that are only registered in Pakistan under the country’s current policy structure. According to them, private fund restrictions make it difficult for local investors to license fund vehicles.
