ISLAMABAD: The government has budgeted Rs27 billion from 3G/4G licenses under the head of non-tax revenue for the next fiscal year 2020-2021 against Rs52.73 billion budgeted for the current fiscal year, which was later revised to Rs125 billion, but the matter of licenses renewal is in the court.
According to the budget documents 2020-2021, under the head of income from property and enterprise (the Pakistan Telecommunication Authority (Surplus), the government has projected to generate Rs2 billion in the upcoming fiscal year against the budgeted one billion rupees for the outgoing fiscal year, which was later revised to Rs6 billion for 2019-2020.
Cellular licenses were issued by the Pakistan Telecommunication Authority (PTA) to two new cellular mobile operators i.e. M/s Telenor Pakistan and M/s Warid Telecom on May 26, 2004, for a period of 15 years, under the Mobile Cellular Policy, 2004, on payment of $291 million after auction.
Cellular license of M/s Paktel Limited, now China Mobile Pakistan (Zong), was also renewed by the PTA under the 2004 policy on October 23, 2004, for a period of 15 years on payment of $291 million.
These licenses were due for renewal on May 25, 2019 and October 22, 2019 respectively. In 2014, the government of Pakistan renewed the license of Ufone at $291 million.
Mobile licenses of Telenor and Jazz expired on May 26, 2019.
The PTA had passed a verdict relating to license renewal of Jazz and Telenor, details for which are as following: fee for renewal of license will be $39.5 million per MHz for frequency spectrum of 900 MHz and $29.5 million per MHz for frequency spectrum of 1,800 MHz; licenses will be renewed with effect from 26th May, 2019 for a period of further 15 years, on a technology-neutral basis, subject to the payment of renewal fee to be calculated in accordance with per MHz price as mentioned above, the payment terms for the renewal fee shall be 100 percent upfront or 50 percent upfront with the remaining 50 percent in five equal annual installments on LIBOR plus three percent, the payment can be made in US dollar or in equivalent Pakistan rupees calculated at the market exchange rate at the time of payment, the upfront payment, as given above, will be paid on or before 21 August 2019.
In case of non-payment of upfront fee, the license will stand expired, the terms and conditions relating to enhanced quality of service and coverage of network will be finalised in line with applicable regulatory practice and 2015 policy after consultation with the licensee on or before 21 August 2019, in case, the licensee opts for non-renewal of its license, it will pay a fee on pro-rata basis of the renewal fee along with all other applicable fee and other charges of the license commencing from 26 May 2019 till the date of withdrawal/vacation of the radio frequency spectrum.
However, mobile operators have approached the Islamabad High Court (IHC) with respect to renewal of mobile licenses. On August 21, the IHC directed Telenor and Jazz for depositing 50 percent of license renewal fee i.e. around Rs36 billion each in two weeks as guarantee till the final decision on the appeal of both cellular operators.
The matter is still pending in the court and on the direction of the IHC; mobile operators have deposited 50 percent of the renewal fee, which were due last year. The government had approved renewal of licenses of two mobile operators i.e. Jazz and Telenor Pakistan at $450 million each, while the third operator -CM Pak at $470 million.
Three mobile operators have deposited around Rs107 billion in the Federal Consolidated Fund (FCF) for license renewal including $238.6 million (Rs37.16 billion) by China Mobile (CM Pak), $224.6 million (Rs35.262 billion) by Telenor Pakistan and Jazz each.
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