11.2MHz spectrum bidding for 10 years okayed

ISLAMABAD: The Auction Supervisory Committee (ASC), through its official minutes, has now granted approval for holding sole bidding to sell the 11.2 MHz spectrum for a period of ten years. Telenor Pakistan will get this available spectrum with a price of around $220 million. The company has shown its interest to get 2X5 MHz in the 2,100 band for a period of seven years.

But the government approved an auction of 11.2 MHz in the 2,100 band for 10-year period. The ASC had rejected the proposal of the Ministry of Information Technology and Telecommunication to provide an additional spectrum for a period of seven years.

The approved minutes of ASC under the chairmanship of Federal Minister for Finance Miftah Ismail have now granted permission to the Pakistan Telecommunication Authority (PTA) to sell 11.2 MHz in the 2,100 band. It is expected that the much-awaited transaction will be accomplished by the end of next month (October 2022) for fetching the first installment of $110 million into the national kitty.

A top official, while quoting the official communication of Telenor to the Ministry of Information Technology, argued that the seven-year term of the license was logically aligned with the 2,029 terminus of the previously assigned spectrum for all the operators in the 2,100 MHz band. Their proposal is in part based on the experience of Bangladesh, where the government in 2021 awarded a shorter term spectrum that remained unsold in their 2018 auction that was also based on a 15- year term license.

However, all other players of the cellular sector have opposed the auction of additional spectrum. Now, the PTA will not hire any new consultant as the transaction will be done on the basis of last base price of spectrum auction.

The ASC held a meeting on August 3, 2022 but its official minutes now approved the auction of the 11.2 MHz spectrum at a price of $19.5 million per 1 MHz, which could fetch $220 million into the national kitty.

Under the existing mechanism, the government could fetch 50 percent amount as first installment. Amid the country requires dollar inflows in order to shore up its dwindling foreign exchange reserves, the government could fetch $110 million on immediate basis, while whole remaining amount will be obtained in different installments.

During the ASC meeting, the PTA had opposed selling the 5 MHz spectrum to one player on the basis of the last consultant report. The consultant fixed base price of $29 million per 1 MHz for 15 years period.

Telenor Pakistan committed to procure 5 MHz in the 2,100 band for a period of seven-year duration at the current base price per year (established in the September 2021 auction). However, the Committee decided to go for auction of 2,100 MHz band in 5, 5 MHz bandwidth for 10 years using the current consultant’s report at net present value.

The official documents showed that the consultative meeting was held to get feedback from the cellular operators, whereby PMCL/Jazz stated that fresh consultation on any auction is required before Jazz that could share its spectrum demand.

The base price should be determined through fresh valuation reflective of changed market dynamics, request for denomination of spectrum value for all future payments in Pak rupees instead of US dollars and a consolidated plan with clear cut spectrum bands, bandwidths and timelines be prepared for predictable decision-making by investors and enhancing spectrum appetite.

The CMPak is not in favour of top-up spectrum or spectrum auction at this stage. The PTML (Ufone) is also not in favour of spectrum and requested the PTA to ensure consistency with previous spectrum awards processes and settled principles. Telenor expressed its interest and requested for award/allocation of 2X5 MHz in 2,100 MHz band in response to additional spectrum demand.