PTA Fixes Fee for License Renewal at $39.5 Million/MHz

Pakistan Telecommunication Authority (PTA) has rejected mobile operators’ apprehensions and passed an order while fixing fee for renewal of the license at $39.5 million per MHz for frequency spectrum of 900 MHz and $29.5 million per MHz for frequency spectrum of 1800 MHz.

 PTA passed the order in compliance of the court order dated 21-06-2019 passed by the Islamabad High Court (IHC) in Writ Petition No. 1751 of 2019 titled as “Telenor Pakistan (Pvt.) Ltd. Vs Federation of Pakistan & another”and in Writ Petition No. 1750 of 2019 titled as “Mobile Communication Limited Pakistan (Pvt.) Ltd. Vs Federation of Pakistan & another” whereby Pakistan Telecommunication Authority (hereinafter referred to as the “Authority”) has been required to decide the issue through a speaking order.

PTA Passes an Order to Fix Fee for License Renewal at $39.5 Million Per MHz

The operative part of the Court order is reproduced hereinbelow for ready reference:

In view of the above consenting statements made by the learned Attorney General for Pakistan and the learned counsel for the petitioner Companies, these petitions are disposed of in the following terms:

•  The Authority will afford the opportunity of hearing to the authorized representatives of the petitioner Companies on 25-06-2019. The latter will ensure that their respective representatives appear before the Authority on the said date at 9:00 a.m.
•  The Authority shall consider the grounds raised before it by the petitioner Companies and decide the grievances through a speaking order.
•   The proceedings shall be completed at the earliest but not later than 15-07-2019.
•  The petitioner Companies shall not seek adjournment so that adjudication is not delayed.
•  The Authority would be at liberty to further extend the time for renewal of the licenses till a speaking order has been passed in compliance with this consent order.”

The Authority passes the following order:

a) Fee for renewal of License shall be US $ 39.5 million per MHz for frequency spectrum of 900 MHz and US $ 29.5 million per MHz for frequency spectrum of 1800 MHz;

b) License No.MCT-01/RBS/PTA/2004 dated 26th May 2004 will be renewed with effect from 26th  May, 2019 for a period of further fifteen (15) years, on a technology-neutral basis, subject to payment of renewal fee to be calculated in accordance with per MHz price as provided at para 6.1 (a) above;

c) The payment terms for the renewal fee shall be 100% upfront or 50% upfront with the remaining 50% in five (5) equal annual installments on LIBOR plus 3%. The payment shall be made in US $ or with the option to pay in equivalent Pak Rupees calculated at the market exchange rate at the time of payment;

d) The upfront payment as given in para 6.1(c) above shall be paid on or before  21-08-2019; In case of non-payment of upfront fee as required, the License shall stand expired;

e) All fees and other charges as provided in Part 4 of the License shall apply in similar manners to the renewed License from its effective date i.e. 26

f) The terms and conditions relating to enhanced quality of service and coverage of network shall be finalized in line with applicable regulatory practice and 2015 Policy after consultation with the licensee on or before 21-08-2019;  g) In case, the Licensee opts for non-renewal of its License, it shall pay fee on pro-rata basis of the renewal fee as mentioned in para 6.1 (a) along with all other applicable fee and other charges as provided in Part 4 of the License commencing from 26-05-2019 till the date of withdrawal/vacation of radio frequency spectrum

The Authority concluded;

i. There is no dispute on renewal of the License. Both the Authority and Licensee are agreed and intended to proceed for renewal of License;

ii. The main issue in the instant matter relates to the determination of the renewal price in the light of various factors and approaches/models;

iii. Various jurisdictions have adopted different approaches; i.e. through auction or market-based price, for renewal of license associated with spectrum;

iv. In Pakistan, the spectrum price is being determined through auctions. The latest spectrum price in similar bands was determined through auctions held in the years 2016 and 2017. The said spectrum price can fairly be considered as a benchmark for renewal of the License associated with similar spectrum as market-based price;

v. Quality of Service and roll out obligations required to be enhanced in consonance with 2015 Policy and with the best regulatory practices. However, the Licensee’s concerns on terms and conditions regarding the enhanced quality of service and roll-out obligations are being evaluated and require further consultation with Licensee. Thus, the same shall be finalized after consultation with the Licensee.