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August 22, 2019

Telenor offers $224.6 million as licence renewal fee

Business

August 22, 2019

KARACHI: Telenor Pakistan, the country’s second biggest telecom firm, agreed to pay $224.6 million to the government as the licence renewal fee for operation, it said on Wednesday.

The Pakistan Telecommunication Authority (PTA) put on hold renewal of Telenor’s GSM licence, which was expired on May 2019, on differences over fees.

“In order to reaffirm its commitment to the country, Telenor Pakistan, while preserving its legal rights, has offered to make a substantial payment of $224.6 million to

the government to ensure continuity of services and preserve rights of over 44 million valued customers,” the company said in a statement.

In 2004, Norwegian Telenor secured a 15-year global system for mobile communications’ licence to operate in Pakistan against a winning bid of $291 million. Now, the government wants it and another telecoms firm Jazz to pay $450 million (Rs72 billion) as a licence renewal fee, much higher than the auction cost in 2004. A licence fee was equivalent to Rs17 billion at the 2004 exchange rate.

Faced with bloated budget deficit challenge, the government is scouting various means of revenue mobilisation. It is also under an obligation of International Monetary Fund’s (IMF) loan program to reduce swollen gas between revenue and expenditures. Pakistan agreed to a $6 billion IMF bailout to avert balance of payment crisis.

Telecom operators termed the higher fees as unjustified demand and move to the court to revise the licence cost down. Telenor said the renewal process faces delays due to unfair demands on pricing and rollout obligations, “which may significantly distort the competitive landscape in the industry”.

“Telenor Pakistan has been very keen towards timely renewal of its telecom

licence and, in the past two years, tried its utmost towards a fair and transparent

outcome.”

The telecom operator said it would continue to pursue its legal case to protect its rights available under law in order to have final resolution of the matter.

GSM Association – a global trade body that represents the interests of mobile network operators worldwide – has already expressed serious concerns over the hefty fees for mobile spectrum licences, saying it poses a significant risk to mobile connectivity of millions of citizens.

“We have already seen the damaging consequences that high spectrum prices

have on coverage and quality of service in other countries,” Brett Tarnutzer, head of Spectrum GSMA said in a statement in May.

“It’s important that Pakistan doesn’t repeat these mistakes, and place gaining inflated revenues from spectrum licences above the connectivity of its citizens.” Cellular mobile operators contributed to substantially increase mobile penetration in the country.

Mobile phone subscribers exceeded 161 million as opposed to 3.4 million in 2003, while there are 69 million 3G/4G subscribers with the modern mobile technology having 32.72 percent penetration.

Telenor Pakistan said it renders efforts to provide seamless telecom and digital services to the people of Pakistan and contribute to the national exchequer. “The company remains hopeful of a fair outcome and looks forward to the government and PTA to fulfill its commitment to ensure fair competition and forward-looking policies and regulations,” it added. “Telenor Pakistan remains committed to its customers as well as socioeconomic uplift of our society.”

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