PTA Publishes the IM for 3G 4G License Auction
PTA has published the Information Memorandum for 3G 4G auctions, in which it has finalizes the auction date for license i.e. 7th April, 2014.
The IM, prepared by a consortium of international consultants sets rules and processes for upcoming auction, which says that there would be an open bidding if demand exceeds supply. The condition of selling the 3G spectrum at the base price seems to be benefitting the potential bidders, as it clearly states that the spectrum will be auctioned at the base price of $295 million.
According to the IM, if there is a case where the auction is not required due to any demand, applicants that submitted a sealed bid offer supported by a correct pre-bid deposit will be awarded the amount of spectrum stated in their sealed bid offers for the 2,100 MHz (megahertz) band at the base price.
According to a PTA official, for instance, if the bids remain within 30 MHz in the 2,100 MHz band and the bidders quote $300 million for each band of 10 MHz, they will be awarded the license at $295 million.
One of the interesting fact about this bidding is that for getting spectrum in 1,800 MHz band, which is 4G, the bidder needs to win at least one 3G license. The licenses will be granted within 30 days of receiving 50% payment of initial spectrum fee. The bidders will submit 15% of the total bid value as earnest money.
Last week, the federal government announced that it would auction three 3G license, two 4G license ($210 million each) and one license of defunct Instaphone ($291 million) to only a new entrant. It has estimated to receive a minimum of $1.6 billion through the auction process.
According to the IM, national population coverage by the cellular mobile network has reached 75%. The cellular mobile segment accounts for 78% of telecom market revenues and there were 134 million active SIMs by January this year. The mobile market revenues reached $3.2 billion by the end of fiscal year 2012-13.
Mobilink was the largest player, taking away 30% of total revenues, according to the IM. Telenor’s share in revenues stood at 28%, followed by Ufone 19%, Warid 12% and Zong 11%.
According to the calendar, the auction will be held on April 7. The bidders have been given two weeks for holding consultations. If any changes are required in the IM, these will be made by March 17. The bidders can seek clarifications until March 19.
March 25 is the deadline for prospective bidders to submit application forms and sealed bid offers with pre-bid deposits. On March 28, PTA will notify qualified bidders. However, it can change the dates, if deemed necessary.
Initially, the winner of 3G license will be bound to provide such services within six months in main cities of Islamabad, Karachi, Lahore, Peshawar, Quetta and 10 other cities, one of which must be located in each of the four provinces.
This condition is only for the existing five players while the new entrant will have one year to cover these cities.
In the second phase, the existing players will have one and a half years to provide coverage to 80% of the district headquarters. In the last phase, the license holders will have five years to provide coverage to 90% of tehsil headquarters.
Advantage of technology: Difference between 3G and 4G
On technical grounds, 1,900 to 2,100 megahertz (MHz) is the spectrum bandwidth that is most popular for 3G services while 1,800 MHz is popular for 4G services.
Simply put, 3G services offer higher data transfer rates for internet including browsing, uploading, downloading and live streaming compared to 2G. However, 4G services offer even higher data transfer rates than 3G.
Another difference is that 3G provides an improved quality of voice service (voice calls) compared to existing services offered by the 2G network.
The main benefit of broadband lies in its ability to deliver basic services to citizens. Through applications such as e-education, e-medicine and e-governance, to name a few, users can easily have access to education, healthcare and governance.