3G 4G auction money

Jazz, the largest telecom company in Pakistan, happened to be the only company which submitted the bid for a 10 MHz paired slot in 1800 MHz as part of the Next Generation Mobile Services (NGMS) spectrum auction 2017.

Pakistan Telecommunications Authority (PTA) in a recent press release confirmed this news stating, “PTA will now evaluate the bid as per IM and if it is found to have met all required conditions the bid will be declared successful.” Suffice to say that that the telecom giant that successfully transformed two major telcos into one would pass with flying colors.

Upon approval, Jazz would pay the government $295 million and additional 10% tax ($29.5 million) for the 4G spectrum.

There are now three 4G enabled telcos (Jazz, Telenor, and Zong) and one smaller one (Ufone), apparently left out, with only 5 Mhz 3G spectrum under its belt.

Anusha Rehman
Anusha Rehman, State Minister for IT&T

Just like the Musharraf era is remembered for introducing and facilitating the GSM technology in Pakistan, the Nawaz era and the efforts of Ministry and PTA will be acknowledged for introducing 3G/4G technology in the country as well as bringing $ 1.98 billion to the national exchequer by selling the spectrum.

Although, we shouldn’t compare ourselves with Bangladesh where 3G technology was launched ahead of us, and it was we who were criticizing the then government of PPP for not conducting timely auction; however, the incumbent government has proven speedy enough to surpass the neighbor by producing three 4G equipped operator.

Ismail Shah, chairman PTA
Ismail Shah, Chairman PTA

In the first 3G/4G auction in 2014, the government received $1,113 million from the companies alongside $111.282 million in taxes whereas, the second round brought $ 395 million for license and another $ 39.5 million in terms of taxes. The recent one will produce a total of $ 324.5 million for the national kitty.

Well, the money is in the bag, and the recent auction is another feather in the cap, the real challenge starts here, which is, how to transform the entire sector into a $ 20 billion industry.

Finance Ministry, IT&T Ministry and PTA will need to sit down for a while and figure out that why all other operators did not opt to submit the bid. Why it was only the Jazz that came forward to take a risk in spite of the fact that it only paid $ 120 million worth dividend to its shareholders since its inception in Pakistan.

Seemingly, Mobilink-Warid merger didn’t go well for over 52 million customers who despite being a part of the largest network have been in the state of fear of being left behind in the 3G/4G race. Therefore, it was a must have an asset for the Jazz to grab; however, the question still looms, why others didn’t think about it?

There are few must-to-do things before dreaming about a multi-billion dollar industry.

The most heavily taxed sector, telecom, is still pleading for an Industry status in the country and the stringent taxes are eating away their chances of survival in the market. Though it is quite admirable that the Ministry of IT and the government auctioned off NGMS at historical prices but what good is that effort if it doesn’t bring about any future revenue?

Recently, the telecom sector voiced their concerns against the NGMS auction, but the government brushed them off and rejected their demands.

So, to ensure that the telecom companies receive its fair due, the government need to:

  • Rationalize telecom taxes
  • Award industry status to the telecom sector

With the new budget right around the corner, it is yet to be seen whether the state would pass or fail its test that will determine the future of 4G services in our country. It is no hidden fact that Warid quit the Pakistani market after it failed to see any return on the billions invested in the company.