'Spectrum auction delay may inflict $1.8bn loss on Pakistan over next 5 years'

ISLAMABAD: With recommendation to adopt a balanced approach, the GSMA [Global System for Mobile Communications Association] has estimated that if Pakistan delays its spectrum auction further, it will cause a loss of $1.8 billion (Rs500 billion) in GDP over a five-year period from 2025 to 2030.

“Unsold spectrum in previous auctions has already led to lost economic growth. For the upcoming auction, the impact of unsold spectrum because of excessive reserve prices will be even more substantial. A two-year delay to availability of new spectrum is projected to result in a loss of USD1.8bn (PKR 500bn) in GDP over the 2025-2030 period compared to a baseline scenario in which all bands are sold. This increases to USD4.3bn (PKR 1,168bn) in the case of a five-year delay,” the GSMA stated in its report on Pakistan.

The GSMA, in its report released on Wednesday, recommended to Pakistan for setting reserve prices for all bands conservatively, and lower than in previous auctions, to allow the market to determine a fair price and to reduce the risk of leaving spectrum unassigned. It also asked to denominate all spectrum fees in local Pak Rupees (PKR) instead of USD, to mitigate the impact of currency fluctuations. It also recommended providing payment flexibility with options of instalments over the duration of the licence. Any upfront fees will need to be set as affordably as possible and carefully consider any licence obligations, in particular, the costs of meeting any obligations should be deducted from spectrum fees. The GSMA asked to commit to a spectrum roadmap to reduce uncertainty about future spectrum availability and aid network planning.

The report says that Pakistan’s upcoming spectrum auction should focus on enhancing the country’s digital infrastructure rather than maximising government revenue. The 600 MHz set to be made available in the upcoming auction, including over 500 MHz in the core mid bands such as 2.3 GHz, 2.6 GHz and 3.5 GHz, which will be essential to addressing the country’s current shortfall. Excessive spectrum pricing has serious consequences for industry and consumers. Studies by the GSMA Intelligence and others have found a causal link between high spectrum prices and slower mobile data speeds, worse coverage and slower rollout.