Spectrum Pricing Deadlock Pushes Pakistan’s 5G Rollout Further Back

Pakistan’s long-anticipated 5G spectrum auction has once again been pushed back, as the federal government finds itself trapped in a policy dilemma over spectrum pricing. Officials fear that setting high reserve prices could discourage telecom operators from bidding, while lowering prices, despite clear recommendations from an international consultant,could expose the government to political and regulatory scrutiny.

This unresolved tension dominated discussions at a meeting of the Spectrum Advisory Committee (SAC) on Tuesday, which ended without a firm decision on auction timelines or pricing benchmarks. According to sources, the government is now targeting the first quarter of 2026 for the auction, further delaying next-generation connectivity even as public frustration over poor mobile service continues to mount.

Inconclusive SAC Meeting as Service Quality Worsens

The SAC meeting was chaired by Federal Minister for Finance and Revenue Muhammad Aurangzeb and attended by the Federal Minister for Information Technology and Telecommunication, the Chairman of the Pakistan Telecommunication Authority (PTA), and other key stakeholders.

Officials briefed the committee on auction preparedness, spectrum availability, and prevailing market conditions. The backdrop to these discussions was a steady deterioration in mobile service quality across the country, with users frequently reporting dropped calls, slow data speeds, and network congestion.

Despite explosive growth in mobile data demand, nearly 600 MHz of spectrum remains idle. Currently, only 274 MHz of spectrum is serving close to 200 million subscribers, a mismatch that industry experts say is placing severe strain on existing networks and limiting operators’ ability to improve quality of service.

Consultant Warns Against High Reserve Prices

National Economic Research Associates Inc. (NERA), a US-based consultancy hired to advise on Pakistan’s 5G spectrum auction, has presented its findings to the SAC. The consultant cautioned that excessively high spectrum prices could result in fewer participating operators, reduced competition, and weaker incentives for innovation.

According to NERA, such outcomes would ultimately harm consumers through higher tariffs and poorer service quality. Importantly, the consultant stressed that from a net government revenue perspective, lower spectrum prices are likely to generate higher long-term returns by supporting sector growth, expanding usage, and increasing tax revenues over time.

NERA also recommended extended payment terms for spectrum licences, citing the heavy capital investment required for network rollout and system upgrades. Comparable markets such as Vietnam, Indonesia, and Bangladesh have adopted more flexible payment structures to encourage participation and accelerate deployment. Additional incentives were suggested for the 3.5 GHz band, which is exclusively used for 5G services, even as fixed wireless access (FWA) opportunities expand.

Structural Issues Holding Back Spectrum Allocation

The consultancy identified several structural factors behind Pakistan’s low allocation of International Mobile Telecommunications (IMT) spectrum. These include repeated delays in auctions, high base prices, and unfavourable commercial terms in past processes.

In the 2014 auction, for example, operators were required to purchase the less desirable 2100 MHz spectrum to qualify for the more attractive 1800 MHz band. In another instance, a portion of the IMT spectrum was reserved for a new entrant that never entered the market, leaving nearly 30 percent of the offered spectrum unsold.

Dollar-pegged pricing has further compounded the problem. Since the last auction in 2021, the Pakistani rupee has depreciated sharply, with the exchange rate moving from Rs163 per dollar to around Rs278, a roughly 70 percent increase in cost for operators purely due to currency devaluation.

Economic Cost of Delayed and Unsold Spectrum

Industry bodies warn that the economic cost of further delays could be substantial. According to the GSMA, failure to sell available spectrum due to excessive reserve prices could result in significant losses to the national economy.

A two-year delay in making new spectrum available is projected to reduce GDP by $1.8 billion (approximately Rs500 billion) between 2025 and 2030. If delays extend to five years, the loss could climb to $4.3 billion (around Rs1,168 billion).

GSMA also noted that previous auctions in Pakistan frequently left spectrum unsold because of high reserve prices. This slowed 4G rollout and adoption and denied the economy an estimated $300 million (Rs80 billion) in broader digital and productivity gains.

Regional Comparison Highlights Capacity Gap

Comparisons with regional peers underscore the scale of Pakistan’s capacity shortfall. Bangladesh, for instance, has allocated around 700 MHz of spectrum to serve roughly 173 million subscribers. Pakistan, with a larger subscriber base, is operating with significantly less spectrum, raising questions about policy delays and allocation strategy.

Officials acknowledged during the meeting that unlocking idle spectrum is essential to improving service quality and enabling next-generation networks. Without timely intervention, they warned, service degradation could worsen and undermine Pakistan’s broader digital transformation goals.

What Comes Next: Decisions at the Top

The policy process is now entering a decisive phase. A detailed briefing is scheduled for the Deputy Prime Minister on Wednesday, followed by a presentation to the Prime Minister the next day. These discussions are expected to shape final decisions on reserve prices, payment terms, timelines, and the release of dormant spectrum.

While the planned 5G auction remains a potential inflection point for the telecom sector, stakeholders caution that further delays could push meaningful improvements in connectivity beyond 2026. For millions of consumers already struggling with subpar mobile services, the coming days may determine whether relief is finally in sight or postponed yet again.

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