Govt. Approval for Licenses Takes a Kick Start: Licenses For Two Operators Approved

The federal cabinet on Tuesday approved a policy for renewal of cellular mobiles licenses for 15 years, of which the government has estimated to generate revenue of $1.37 billion. The government has approved to renew licenses of two operators at $450 million each while the third operator would have to pay $470 million, sources added.

Govt. Approval for Licenses Takes a Kick Start: Licenses For Two Operators Approved

Special Assistant to Prime Minister on Information and Broadcasting Dr. Firdous Ashiq Awan addressing a press conference said that Prime Minister Imran Khan presided over the cabinet meeting here on Tuesday where the matter pertaining to mobile license renewal was discussed. She said the government has approved the renewal policy and expected revenue of $1.37 billion from this process.

She said the matter was pending for the last two and a half years but no one was ready to take ownership.

She further said that the government is likely to unveil new telecom policy soon to attract investment and provide a conducive environment to investors besides building their confidence.

The federal cabinet on April 16, 2019, constituted a five members committee for further deliberations on the policy for renewal of cellular mobile licenses and

Pakistan Telecommunication Authority (PTA) had submitted a report to the cabinet for the policy renewal as was directed by the Prime Minister. It is multi-dollars transactions and it was felt that there was a need for further deliberations.

PM Khan had constituted a five members committee comprising on Minister for Information Technology and Telecommunication Dr. Khalid Maqbool Siddiqui, Advisor to Prime Minister on Finance Hafeez Sheikh, State Minister for Revenue Hammad Azhar, Advisor to Prime Minister Abdul Razzak Dawood and Federal Minister for Privatization Mian Mohammad Somro for reviewing PTA report. After their consensus, the policy would be approved for renewal of mobile licenses.

Cellular licenses were issued by 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 the auction.

The cellular license of M/s Paktel Limited now China Mobile Pakistan (Zong) was also renewed by PTA under the 2004 Policy on October 23, 2004, for a period of 15 years on payment of $ 291 million. These licenses are now due for renewal on May 25, 2019, and October 22, 2019, respectively.

In 2014, the government of Pakistan renewed the license of the state-owned entity, Ufone, at $291 million through interest-free payment installment in order to maintain a level playing field. Telenor Group had recommended that license of Telenor Pakistan and other operators be renewed under the same terms and conditions.

M/s Veon, one of the largest foreign investors’ in Pakistan has sought a predictable and transparent investment climate and license renewal price of not more than $291 million.

Section 8(1), 8(2)(a) and 5(2)(a) of the Pakistan Telecommunication ( Re-Organisation) Act, 1996 provide the policy framework for determination of terms and conditions of licenses.

Section 8(1) states that the federal government may, as and when it considers necessary, issue policy directives to the Authority, not inconsistent with the provisions of the Act, on matters relating to telecommunication policy referred to in sub-section (2), and the Authority must comply with such directives. 8(2) the matters on which the federal government may issue policy directives shall be- (a) the number and term of the licenses to be granted in respect of telecommunication systems which are public switched networks, telecommunication services over public switched networks and international telecommunication services, and the conditions on which those licenses should be granted.

The Ministry of Telecommunication had submitted the following proposals to the federal government for consideration: (i) the renewal price for the right to use frequency spectrum included in the licences being renewed shall be in accordance with per MHz price benchmarks from frequency spectrum auctions of 2016 and 2017 i.e. per MHz price for frequency spectrum in 900 MHz and 1800 MHz shall be $ 39.5 million and % 29.5 million respectively; (ii) the tenure of the renewed licences shall continue to be 15 years; (iii) payment term shall be 100 percent upfront or 50 percent upfront with remaining 50 percent on five equal installments on Libor+3 percent; (iv) licences renewed under this policy directive shall be technology neutral in line with existing GoP policies; (v) provision of spectrum trading/ sharing as per the approved regulatory framework for such sharing/ trading will be incorporated in the renewed licences by PTA;(vi) terms and conditions relating to coverage, enhanced Quality of Service (QoS), etc, under the renewed licenses, shall be incorporated by PTA in line with Telecom Policy 2015 and as per applicable regulatory practices; (vii) Frequency Allocation Board will provide options in lieu of cross border interfered spectrum to CM Pak (Zong in 900 MHz band included in its current licences. In case of non-acceptance of proposed options, renewal of CMPak license and its associated spectrum (2x 13.6 MHz) shall be dealt in accordance with S.No.4 (v) of 42nd Board’s meeting decision (i.e. without any compensation in terms of additional frequency assignments.