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It seems that telecom authorities are gearing up for another spectrum auction this year. Recall that the last spectrum auction, in April 2014, had sold off four 3G licenses and one 4G license, raising $1.1 billion in the process. Two licenses, one in the 850MHz band and the other in the 1800MHz band, remained unsold. Now last Friday, PTA invited proposals for consultancy services to advise the best way to auction these remaining two licenses.
The move is not surprising - the government retained the right to auction off unsold airwaves - but it wasn expected less than a year after the previous auction. However, its a good development - it shows that the regulator is ready, on its part, to keep making the spectrum available for the market, which has long complained of not having regular, planned spectrum auctions.
Granted, the finance ministers fiscal considerations may again be at play here. But its a win-win for all: the accountant gets his money; the operators extra spectrum. Based on previous auctions base price, the two licenses will collectively raise a minimum $501 million.
It is likely that the base price will be a bit higher now due to the positive impact of the growing mobile broadband market, which was previously non-existent.
It is not unusual for regulatory bodies to toy with holding a spectrum auction and then suddenly abandon the plan due to any number of reasons. PTAs fresh bid also seems exploratory in nature. Thats why the consultancy contract is for doing market assessment and gauging investor assessment. The consultancy contract for "holding" the auction may come later should market assessment come out positive.
For a positive market assessment, market appetite for fresh spectrum is a must. This appetite - which is a function of value proposition associated with the new spectrum - will come from two sources: existing operators and potential new entrants.
The existing operators are already busy and invested in rolling out the 3G and 4G services. Their appetite for acquiring more spectrums may be rather low at this stage so soon after the auction. Maybe a couple of years later, they will need to purchase more frequency to ensure smooth data traffic on their networks.
Warid, which did not participate in last auction, may be the only operator which could use some more spectrum, but it currently seems content rolling out LTE on existing network.
The other source, Greenfield investment, is going to depend on how pro-new-entrant the next spectrum auction is. Mind you, the previous auction was tilted towards the incumbents, which hurt the cause of potential new players. If incumbents are not interested, authorities can make the auction exclusive for new entrants.
Offering friendlier terms will help, but that will probably annoy the local lads. But lack of local interest may also kill the auction. Lets see which way the cookie crumbles!

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