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ISLAMABAD: The government has decided in principle to postpone the auction of next generation mobile services (NGMS) spectrum in Pakistan, Azad Jammu and Kashmir (AJ&K), and Gilgit-Baltistan (GB) till the next fiscal year, it is learnt.

The government had earlier planned the spectrum auction in the outgoing

fiscal year for improvement of mobile broadband services of which the government had estimated to generate over one billion dollar of revenue.

The auction postponement till next fiscal year would help the government to show better non-tax revenue in the budget 2021-22, sources added.

According to the PTA officials, they are fully prepared to hold auction, but waiting for the government policy directive, which is yet to be approved.

Federal Minister for Finance and Revenue Shaukat Tarin on May 25, 2021, chaired the 4th meeting of the Advisory Committee for the release of NGMS Spectrum in Pakistan, AJK and Gilgit-Baltistan.

After a detailed discussion, the Advisory Committee approved the draft policy directives for the release of the NGMS Spectrum in Pakistan, AJK, and GB, unanimously for improvement of mobile broadband services with setting base price of $31 million and $29 million for the spectrum auction in 1,800 MHz and 2,100 MHz bands, respectively.

After the approval, the draft policy directive would be sent to the federal cabinet for approval.

After getting the cabinet approval, the Ministry of Information Technology and Telecommunications would send the policy to the Pakistan Telecommunication Authority (PTA) for implementation and holding spectrum auction.

After receiving policy directive, the PTA will issue Memorandum of Information (IM) for the auction.

Cellular operators would be required to response within 15 days, if they have any question and after finalisation, a final date would be issued for the auction.

Official sources revealed to Business Recorder that the Advisory Committee for the release of the NGMS Spectrum in Pakistan, AJK and Gilgit-Baltistan was informed about the timeline and challenges in the spectrum auction.

There is very little time left in the current fiscal year and the spectrum auction is no more possible.

Now the spectrum auction would be held in the next fiscal year, the sources added.

According to the draft policy, a copy of which is available with Business Recorder, the spectrum auctions for the NGMS in Pakistan were conducted in 2014, 2016, and 2017, respectively, under the policy directives issued by the federal government of Pakistan.

Subsequently, the demand for data services grew exponentially and in a short period of seven years, the broadband subscribers in the country increased from mere 14 million in 2014 to over 100 million in April 2021.

A significant surge in the demand of broadband services has been witnessed particularly during the Covid-19 pandemic.

This ever-increasing reliance on wireless mobile broadband services necessitated the demand for availability of more spectrum and hence, to meet the connectivity needs of the citizens of Pakistan.

The draft policy further stated that after considering the recommendation of the Auction Advisory Committee; based on the inputs from consultant and PTA/Frequency Allocation Board (FAB); the federal government in exercise of powers conferred under Section 8(2) of the Pakistan Telecommunication (Re-organization) Act 1996 (Amended 2006), hereby issues the following policy directive for auctioning the available radio frequency spectrum in 1800 MHz and 2100 MHz for compliance by Pakistan Telecommunications Authority:

(a) a transparent, competitive process shall be formulated by the PTA for auctioning 12.8 MHz paired spectrum in the 1800 MHz band and 15 MHz paired spectrum in the 2100 MHz; (b) PTA will issue an Information Memorandum specifying therein the detailed procedure of the auction, including eligibility criteria and steps for participating in the auction process.

The auction will accordingly be conducted by PTA in minimum possible time after issuance of Policy Directive by the federal government; (c) the spectrum assignment will be “Technology Neutral” and usable for all existing and upcoming advanced generations/technologies, within the applicable policy framework of the Government of Pakistan; (d) for the purpose of harmonization and to ensure optimal utilization of radio frequency spectrum, PTA/FAB shall endeavour to provide each CMO with the opportunity to acquire such additional spectrum that will enable it to hold, in total, spectrum in multiples of standard 5MHz paired spectrum blocks; (e) post spectrum auction, all CMOs will be required, within 1x month, to comply with the rationalization plan as may be issued by the PTA/FAB to ensure the optimal utilization of contiguous spectrum holdings in 1800MHz band and 2100 MHz band respectively; (f)the base price for 2x1 MHz (1 MHz paired) spectrum in 1800 MHz is USD 31 million while the base price for 2x1 MHz (1 MHz paired) spectrum in 2100 MHz is USD 29 million respectively; (g) existing CMOs and new entrants are eligible to participate in this auction subject to a spectrum cap of 40 percent in complete 1800 MHz band; and (h) transactions related to Spectrum Auction i.e. spectrum fee and related mark-up shall be US dollar denominated, however, the amount shall be paid either in US dollar or in equivalent Pak rupees.

For the purpose of conversion, the National Bank of Pakistan TT selling rate prevailing on the date preceding the date of payment shall be used.

Payment terms shall be as under; (i) full upfront payment (100 percent); or (ii) minimum 50 percent upfront payment, while with the remaining to be paid in five equal instalments in five years with cumulative mark-up rate of one year LIBOR+3 percent; (iii) moreover, if auction winner intends to pay the remaining balance liability on account of initial spectrum fee at any time before the end of five years, it would be acceptable and without any pre-payment penalties.

However, mark-up at the rate LIBOR +3 percent shall be payable on the balance amount till the date the final payment is made.

A new license will be issued to successful bidder using the auctioned spectrum.

The tenure of frequency assignment will be 15 years.

Provisions for Spectrum Trading/Sharing as per the approved regulatory framework for such sharing/trading will be incorporated in the licenses.

Further terms and conditions relating to enhanced coverage, enhance Quality of Service (QoS) etc, shall be incorporated by the PTA in order to enhance mobile broadband proliferation in the country.

Copyright Business Recorder, 2021

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