3G auction may be delayed over senators’ observations

By Ijaz Kakakhel

ISLAMABAD: The government is likely to delay the auction of 3G licensing, which was scheduled for March 29, 2012 over severe observations raised in the Upper House and its attached standing committee, sources told Daily Times here on Wednesday.

Next date and schedule for holding the auction will be decided later on. Formal announcement for change in schedule is yet to be made, however, an advertisement published today, available on PTA’s website, revealed that the auction will be delayed by a couple of months. According to the advertisement, the PTA is looking for a consultancy firm of international repute to offer services for the auction of 3G licence. Interestingly the last date for submitting Expression of Interest (EoI) for consultancy services is March 26, 2012, that’s just three days ahead of the scheduled 3G auction date of March 29, 2012.

The government and telecom regulator, Pakistan Telecommunication Authority (PTA) was under heavy criticism from opposition senators on modalities of 3G auction. A Senate’s Standing Committee on Telecom and IT later asked PTA to make amendments in 3G policy by incorporating changes which are; auction 3G licences only, and remove the terms 4G/LTE and technology neutral from licensing draft, 4G/LTE will be licensed later for earning more money, and increase the base price from $210 million to $291 million. The committee also recommended that no defaulter operator would be able to participate in the bidding process for 3G.

In the 3G licence auction, the regulator used the word 3G/4G/LTE etc for inviting bidding and the senators questioned over it. Industry sources told this scribe that the government might earn more revenue if it offers only 3G for auction currently and offers 4G, LTE etc in future. But the regulator and the government have intended to provide all things in one go instead of one by one. India auctioned the 3G licence in 21 regions but all regions could not get their licence in one go. According to industry sources, the government might earn more revenue if it auctions 3G licence province-wise. The auction everything in one go might deprive the government from potential revenue earning.

Sources in the PTA told Daily Times that the auction of 3G might be delayed but were unable to provide the exact date. PTA is not wholly responsible for the auction of 3G licensing but the government has formed Auction Supervisory Committee in this regard. Federal Finance Minister Abdul Hafeez Sheikh will be presiding over that committee while Federal Minister for Water and Power Naved Qamar and federal minister for privatisation are its members. About increase in base price for the auction, the PTA sources said they are unable to say anything about it but the committee may take a decision in this regard.

Sources in the telecom industry were of the view that if the government offers auction of 3G licensing, the government might have earned $1 billion in 2008 because at that time the country’s situation was favourable for foreign investors. With the passage of time, and severe energy crises where vendors are confronting up to 15 hours daily load shedding, it is very difficult for the government to attract the much-needed foreign investment.

Sources in the industry were of the view that the existing operators are easy with the available functional technologies of 2G and they are also earning their profits. They are least interested in 3G technology but the government is interested in auction of advanced technologies like 3G. In order to induce the existing operators and vendors the government has decided to offer 4G/LTE etc as incentives. The senators also opposed the auction of all technologies in one go and recommended to go one by one for auction.

The senators also questioned over setting base price as $210 million (minimum price) for 3G and suggested that it should be equal to the last bidding of 2G held in 2004, which fetched $291 million. The committee also expressed serious observations over mode of payment by any successful bidder, which according to the rule has to pay 50 percent payment within 30 days and the remaining 50 percent will to be paid in five equal instalments in local currency.

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