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Huge 3G licences fee annoys cellular companies

19 November, 2013

KARACHI: The government's plan to sell three licences in 3G auction and generate $1.2 billion from it, almost $330 million from each operator, does not appear to be beneficial for the cellular operators as they have termed it an unrealistic figure.

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KARACHI: The government's plan to sell three licences in 3G auction and generate $1.2 billion from it, almost $330 million from each operator, does not appear to be beneficial for the cellular operators as they have termed it an unrealistic figure.

Keeping in view the current investment environment of the country, the telecom sector is not much willing to participate in the spectrum auction if the government has announced the prices accordingly to its budget 2013-14 anticipations.

According to reliable industry sources, the possibility could not be ruled out that one of the four telecom operators in the country might not take part in upcoming spectrum auction owing to expected hefty licence prices.

In this regard, when contacted, Telenor Pakistan Chief Corporate Affairs and Security Officer Muhammad Aslam Hayat said, "Telenor Pakistan will be evaluating its business case for 3G taking into account the terms and conditions that the government will stipulate in the final information memorandum document and the overall regulatory environment." He said, "The will and desire to participate in the 3G licence auction is there, however the government has to do its bit to make the 3G service affordable for the people."

The government also needs to rationalise taxation especially withdrawal of sector specific taxes to make telecommunication services affordable for the general public, said Hayat.

He said that the regulatory policies need to be finalised after public consultation and be based on a long-term predictable approach and reasonable return on investment.

Hayat further said, "We are looking towards working with the government and the regulator to come up with a business-friendly 3G policy which is also beneficial for the consumers, the economy and the industry."

On the other hand, Our Sources has learnt through internal reliable sources that all operators are not satiated with the anti-investment policies of the government of Pakistan as a source said that huge licences fee will further diminish the already slower Return on Investment (RoI) of operators.

However, the base price has not yet been disclosed as the government will determine the base price for the spectrum based on recommendations of consultants, who will be appointed in a couple of months. The consultants will also decide the number and size of the blocks in the proposed 30MHz spectrum.

"The objective, to connect all 180 million population in short-term with 3G services can only be achievable if the government of Pakistan facilitated investors by offering technology licences in an affordable range," he said. The government should follow Bangladesh where the government gave a relaxation to telecom investors and operators were able to get a quick RoI, said an internal source.

He said, "If the operators have to pay a huge upfront fee then it will impact their ability to invest in networks."

He, while giving example of neighbouring country India, said, "The telecom industry in India was not able to recover its investments due to obtaining licences at a high price, whereas in Bangladesh the operators were assisted by the government to get maximum reach of 3G services by giving out licences at a reasonable fee," he added.

He urged the Pakistan Telecommunication Authority (PTA) to ensure that the reserve price is reasonable and that the government's fiscal concerns don't hijack the agenda.

He was of the view that mobile phone companies are already under immense pressure by the government, establishment and other administrations as every government organisation is in a habit to blame mobile operators as a result of any wrong doings. The industry has had to face a lot of issues like being pointed at in terrorist acts, but it is the same industry has helped keep a track and stop such activities, he added.

The overall industry environment is very discouraging for the investors and expecting foreign direct investment (FDI) in this environment is same as living in a fool's paradise, he added. FDI is decreasing due to various reasons including increase in taxes and daily expenses that are incurred by the operators, he informed.

End.


 
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