3G spectrum licenses auction concludes at $896.8 million

ISLAMABAD – The third round of auction process for 3G licenses concluded at $896.8 million on Wednesday with a $11.8 million increase in the bids for 3G licenses.

The total opening price of the four lots of 3G licenses was $885 million while there was an increase of $5.9 million in Lot D and Lot A in the second and third rounds respectively. Pakistan Telecommunication Authority (PTA) Chairman Dr Ismail Shah had earlier said that the first round of the license auction process had concluded with the four competing companies agreeing to the base price.

Initially, three 10 MHz 3G license and two 10 MHz 4G license were announced for auction but currently the auction for four lots of the 3G spectrum are underway. The addition of another lot of the 3G spectrum licenses was made in accordance to a stipulation in the information memorandum for the spectrum auction.

The auction for the 4G licenses would take place after the completion of the 3G licenses. The second and third rounds of the auction for 3G license began with a two per cent incremental bid price. The PTA committee is authorised to increase the bid price by one to three per cent per round.

There are a total of eight rounds of the auction process. The base price for a 3G license is $295 million and for a 4G license is $210m. Mobile phone companies can bid for one 10MHz bandwidth license or the entire spectrum, comprising three 10MHz licenses (a total bandwidth of 30MHz).

The four companies participating in the bidding had earlier logged on to the software of the PTA for the process. According to PTA officials, the four bidders were assigned different colours, and each bidder would bid through the colour allotted to them instead of through their respective names. The PTA expects to receive more than $1.3 billion from the auction.

The introduction of 3G and 4G spectrum in the telecom sector is expected to revolutionise the way subscribers stay connected. The 4G provides even faster speeds and ultra-broadband services, putting data-intensive services such as online gaming, high definition mobile TV and video conferencing within the reach of the average consumer.

For consumers, the auction will not immediately translate into the advent of 3G connectivity on their mobile phones. In fact, the timeframe agreed upon between the PTA and mobile operators envisions 3G roll out within six months of the auction. In the first phase, services will be available in Islamabad, Karachi, Lahore, Peshawar and Quetta and later on in other cities from each of the four provinces.

The second phase, which will start a year and a half after the auction, envisions the expansion of 3G services to about 80 more cities. In the third phase, which will begin about four years from now, 90 per cent of all tehsil headquarters will have access to 3G services.

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