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Mobile operators await renewal of licence

Shahid Shah
KARACHI: Telecom operators remain puzzled, as licence renewal of three companies is due this year, but the government has so far not announced any framework.




Despite the fact that the licence renewal seeks to ensure continuity of telecom services, provides predictability to the operators and generates revenue for the government, the issue remained unresolved.
Sources said the industry wants renewal at the previous auction rate, while the government would go for higher prices, which would affect the operators.
The industry had already raised concerns over high anticipated renewal prices and has shown willingness to buy additional spectrum, if existing licences are priced at $291 million, the sources said.

“Should the government take the progressive route, it will not only be benefiting from additional revenue, but will also have played important role towards spurring digitalisation in the country,” one stakeholder said.

The last licence renewal of state-owned mobile operator, Ufone, in 2014 was done at $291 million, which has practically 10 more years left before expiry. Renewing the same licences today for other operators for approximately $450 million / telco, or anything above $291 million for that matter, and under any stricter terms, raises a number of concerns on the fairness of the process.
Industry says that renewal for three operators can be priced at latest auction prices (Telenor purchased 2x10MHz spectrum in 850MHz band for $395 million and Jazz purchased 2x10MHz in 1800MHz band for $295 million), bringing $1.375 billion in total. Jazz and Telenor have to renew 2×4.8MHz in 900 and 2×8.8MHz in 1800 band, while Zong has to renew 2×7.6MHz in 900 band and 2x6MHz in 1800 band, the amount at this price reaches $1.37 billion.




The sources said higher prices are expected from the government side, which would not only become a deterrent for the operators to buying more spectrum, as well as making future investments, but also impacts the fairness in a competitive market.
In addition to renewing the three licences at original prices for $873 million, the government has over 2x40MHz spectrum available in the existing bands that it can and should sell for an additional $1.3 billion plus, the way for the government to hit the much anticipated $2 billion mark.

“Every single day that available commercial spectrum is not used means the government is losing out on revenue and consumer experience of telecom services is being compromised,” an analyst said.

Governments across the world have used the radio spectrum in the past to generate revenue by loaning it out to commercial entities such as mobile operators and broadcasters for a fixed term. The trend has changed in developed countries where spectrum is now seen a recourse for socioeconomic development through digitalisation; however, it still remains a mean for boosting exchequer in the developing countries.

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