In the end, it was a race against time. Since the start of the fiscal, the finance ministry had been holding meetings on the matter of holding the next-generation mobile services (NGMS) spectrum auction before the fiscal close. After all, the spectrum auction could potentially fetch nearly a billion dollars in total, half of which would have landed straight in the kitty as non-tax revenues. But there are now reports that suggest the said auction in the 1800MHz and 2100MHz bands has been put on hold, albeit an official word on postponement is yet to come.
The purported delay comes as no surprise to this column, which had earlier warned on May 19 regarding the tight spectrum auction timeline 19: “since the pre-auction Information Memorandum hasn’t been published so far, one cannot really say that the authorities are showing a sense of urgency to conclude the process and get paid before June 30”. While it is not a setback per se, a hold-up was inevitable. Multiple factors seem to have played their part in pushing the auction timeline ahead.
First and foremost is the matter of the envisaged auction timeline going haywire, indirectly, due to political decisions. While spectrum auction is a purely telecom-related affair, the shakeup at the finance ministry, which was leading the advisory committee on NGMS auction, did not help. Some valuable time was lost between late March and mid-April after the departure of two finance ministers in a matter of weeks. The new finance minister picked up the issue and held consultations on the auction, but by then it was May and there was precious little time left to go through with the required pre-auction formalities before June.
There is also this view doing the rounds that the auction has been delayed in order to reap significant non-tax revenues in the next fiscal year. Or in other words, the authorities have been able to buy time and they do not feel the urgency to raise additional revenues in the current fiscal. That would suggest that the government is currently not under the same kind of IMF pressure on revenue shortfall as it was a few months ago. So the auction can take place later, to make the fiscal numbers look better in another year.
Whether or not the mobile network operators (MNOs) were enthusiastic about the auction, the auction delay is not entirely a negative outcome for them. The operators have never been fond of abrupt auctions that only make available scarce amount of spectrum at what they deem unreasonably high prices. MNOs do need more spectrum to keep their hungry data customers from causing network congestions, but their appetite is somewhat constrained these days due to subdued revenues (read more: “State of telecoms”), even as three out of four operators are having to pay sizable license-renewal fees.
Whatever the case may be, the Pakistan Telecommunications Authority (PTA), which had shown readiness by lining up an auction consultant earlier this year and steadily paved the way for a June auction, seems to have been left holding the bag. The auction was a chance to mend fences with a market whose leading players are already in litigation with the government over the episode concerning license-renewal fees. (The sector does not have much expectation of relief from the budget, which is likely to maintain the level of taxes on telecom users, equipment and devices).
What now? How long will the delay be until the cabinet approves the Policy Directive for NGMS auction? It is uncertain at the moment, but in the interval, the regulator and the regulated can come together and resolve differences over spectrum pricing (read more: Case for affordable spectrum). Uncertainty is not desirable for the sector, especially over financial matters that weigh heavy on players struggling to grow topline. It is in the interest of MNO’s planning as well as the country’s digital development that spectrum-related matters, including auction calendar and pricing, acquire some predictability going forward.