PTA: doors for foreign investment opened

Freeway policy licenses to earn were issued to three out of four cellular phone companies from 1990-1991, for a period of 15 years by the Ministry of Communication. The fourth company, Ufone, was issued the license for a scanty Rs 50 million for the same tenure.
Money minting by the existing three companies, namely-Mobilink, Instaphone and Paktel is now over and the Pakistan Telecommunication Authority (PTA) through its well-mapped out minimising policy has, in an open and transparent auction, awarded two new licenses to the highest bidders, Syria-based Space Telecom and Norway's Telenor Mobile Communication, both international companies.
The bids carried a plethora of $291 million each. And that was done without even selling a pennyworth asset. But now the deal scenario has changed a bit. A sum of US$10 million was paid as earnest money by the two companies, Space Telecom and Telenor Mobile communication respectively.
They had to deposit another 25 percent of the license fee by April 28th in the PTA's account. PTA received Telenor Mobile communication's fee but the Space Telecom withdrew, due to some squabble within its consortium associates. So according to the principle, the third bidder, Warid Telecom, which had offered US$280 million, but has now agreed to pay US$291 million gets the license. PTA's is indeed the biggest ever business accomplishment.
A total of $582 million goes to the exchequer sans any stakes. PTA Chief Major General Shahzada Alam Malik (R) has earned a well-deserved extoller from President General Pervez Musharraf and Prime Minister Mir Zafarullah Khan Jamali and nevertheless, deserves the nation's complements.
It is not just a deal but a friendly message, loud and clear, a sincere invitation and confidence-building measure for those foreign investors who mean business in Pakistan In fact, vistas for foreign investment have been opened and of doubts and suspicions cleared.
The PTA boss has expressed his gratitude to President General Pervez Musharraf and Prime Minister Jamali for giving a free hand and complete autonomy to PTA to enable it to play a pressure-free role as the Telecom Regulatory Authority.
Going by the cross currents of the current historic deal and sticking to the ongoing investor friendly deregulation policy, the country can foresee billions of dollars' investment in the near future in the Telecom Sector alone.
The three existing companies, Instaphone, Paktel, Mobilink and Ufone are required to pay the same amount - US$291 million each at the time of renewal of their licenses.
Another aspect of the deal is that apart from the license fee, the new companies are expected to start operation within the next six months after the issuance of licenses. A considerable amount will be invested by these globetrotters on the infrastructure, besides creating several thousands jobs. A healthy competition is in the offing.
In the wake of the operation of these two cell phone companies, equipped with the state of the art technology, the existing operators will have to maintain high quality service standards, low activation charges etc and follow suit by dishing out better, cheap, efficient and adept services to the fast-increasing clientage.
There is another good news for cell phone users, PTA has recommended to the government a substantial relief by way of waiver or reduction of activation charges. Lets hope for the best.
None of the companies would come to naught if they work out their economies in the best interests and relief to the cell phone users. With over 20 million cell phones capacity in Pakistan, the operators would be facing each other in healthy competition.
CELL PHONE INDUSTRY: Setting up of the cell phone industry in Pakistan should be given a serious thought in view of the fast growing use of the gadget. That can be done with the collaboration of foreign investors.
PTA sources say that a capacity of 20 million cell phones exists in the country. At present, the cell phone penetration percentage is over 2.6. A break-up of the existing four company's subscribers, from 30 June, 2003 to 29 Feb, 2004 respectively, is Instaphone; 420,000 to 504,300; Mobilink 1,115,000 to 2,468,435, Paktel; 319,400 to 342,220 PTML; 550,000 to 558,430. The total now accedes the figure of 3,873,385.
Encouraging incentives, besides a competitive and congenial atmosphere and concessions to the entrepreneurs who intend to set up manufacturing units, would further accord relief to the people in respect of almost throwaway prices.
There would be more jobs for the youth in this line of business. The gadget has almost become a need of the common man. In view of the currently low teledensity, ie 2.7 percent in a population of 149 million, we can imagine the boom in the cell phone business in future.
The PTA Chief Shahzada Alam Malik hopes that the number of cell phone users will shoot from four million, at present, to about 15 million by 2007.
Meanwhile fixed line phone sphere of the telecom sector has to be seen in its existing scenario. The number of connections total around 4 million.
In the wake of the ever rising use of cell phone there is a marked fall in fixed line phone consumers and this part of the sector is in the process of shrivelling. But it has to be protected through better services to the customer and latest technology.
As far the grant of Local Loop (LL) and Long Distance International (LDI) fixed line-telecommunication services licenses, the PTA Chief has vowed to award licenses in an open, fair and transparent manner.
The date for receipt of applications has been extended to May 30, 2004. For awarding LL and LDI licenses, each party would have to deposit non-refundable processing fee of US$500 while a fee of US$10,000 will be charged for the grant of LL licenses for each region. This fee will be refunded in case license is not granted. In case of LDI license, in addition to non-refundable processing fee, a sum of US$500,000 will have to be deposited as license fee.
The amount will be refunded if the company concerned does not get the license.
In case of LDI license, a performance bond of US$10 million would be required by the intending party on the award of license. With regard to grant of LL (Local Loop) and LDI (Long distance International) licenses, 77 investors turned up on Wednesday last (April 18) for a conference in Islamabad for exchange of views and information.
The conference decided, with the approval of PTA, to extend the date of receipt of applications till 30th of May.
It needs to mention here that the PTA has permitted the licensees to use a type of technology they deem necessary in the best interests of the users. The licenses would last 20 years. At present, fixed line connections total 3.99 million and there are 2.48 million users of cellphones.
There are 0.13 million cardphone booths managed by 177 companies. The authority hopes a tremendous investment of $1 to 2 billion in the fixed line sphere during the next three years generating jobs and investment. The licenses are supposed to extend their services to far-flung, under privileged areas.
LDI licensees are required to commence roll out by building at least one point of interconnect in five of PTCL regions within a specified period of one year of award and in all thirteen (13) PTCL regions within three years.
The Local Loop (LL) licensees will be required to staff operations, with building and operating one point of interconnect, within the prescribed period and in each licensed PTCL region. Failing to meet license obligations, both types of licensees will be penalised. Besides, licensees may be obliged to provide all services mandated to achieve objectives of the deregulation policy.
The success calls for fair competitive environment for all licensees. In case PTCL and other significant market power licensees emerge, they shall be curbed from abusing their dominant positions through anti-competitive conduct.
The existing licensees of the telecommunication services in Pakistan are being permitted to retain their current licensees. They may compete for a new long distance international or seek a local loop license. Meanwhile, as the policy claims, licenses rights will be well looked after and fully protected.
They will have the right to contract for the right of way if they have the desire to construct their networks. Both types of licensees will enjoy the privileges to co-locate in PTCL local and transit exchange facilities and connect their own fibre and radio links.
The vital role played by the cellular mobile operators has been appreciated and recognised, so far as improvement of access to the telecommunication networks in the country ostensibly, people rely and prefer to use mobile phones as an alternative to fixed line telephones.
The cellular mobile technology is operating in a competitive scenario with a view to developing the market. A liberal policy for awarding the licenses was followed.