Setting the Dollar Benchmark is Not a Justice: Telecom Operators

Telecom experts have described the renewal policy for cellular operators as conservative, by not assigning additional spectrum, despite demand in the market, which could have generated additional revenue of $300 million.

The federal government on Tuesday approved the renewal of cellular mobile licenses policy for 15 years that would generate an estimated revenue of $1.37 billion.

Setting the Dollar Benchmark is Not a Justice: Telecom Operators

 

The government has approved to renew licenses of two mobile operators at $450 million each while the third operator would have to pay $470 million, sources added.

Talking to this correspondent representative of different companies said that government neither hear not addressed their concerns and now the final decision will be taken by the Court in this regard.

Sources said that telecom operators were of the view that setting the dollar benchmark is not correct as dollar value against the rupee appreciated very much in recent months. “We earn and spend in local currency then how the government sets the dollar benchmark”, they added. The operators had requested for renewal some 18 months ago, but the government approved the policy just 18 days before the expiry of their license. “We are going to invest billions of rupees, how it is possible to take a decision in such a short time.

Further the operators were requesting of the government to provide level playing field to all operators, however, the license of one of the operator was renewed at one condition but set new conditions for other three which could not be justified. Islamabad High Court (IHC) will take the matter on May 14, 2019, and whatever decision the court takes would be acceptable.

Telecom sources said that operators had requested for additional spectrum, but the government has approved only renewal policy. In the case of additional spectrum, the government would get additional revenue, while operators would provide better services to consumers.

Senior officials in the Ministry of Information Technology and Telecommunication Ministry also described the renewal policy as conservative because it does not assign additional optimal spectrum, despite demand in the market, which could have generated additional revenue of $300 million.

Prime Minister Imran Khan presided over the cabinet meeting on Tuesday where the matter pertaining to mobile license renewal was discussed. The cabinet approved the renewal policy and expected revenue of $1.37 billion from this process.

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.