Pakistan Telecommunication Authority (PTA) reportedly has turned down the demands of the telecom companies to delay the date of the 4G spectrum auction and to cut back the base price of $295 million.
According to ProPakistani, the mobile operators conveyed their concerns to PTA that the fixed base price would be in conflict with the principles that were established at the time of 2014 spectrum auction.
At the previous spectrum auction of Next Generation Mobile Services (NGMS) for 1800MHz LTE frequencies, the base price was set to $210 million. According to The Express Tribune, the government has opted to increase the base price for the new license to overcome the revenue shortfall of Rs 85 billion.
If the government fails to auction the NGMS at the desired price it may suffer a cut in the development budget to keep the deficit at the level according to their agreed terms with the International Monetary Fund under the Extended Fund Facility of $6.64 billion.
Telecom operators have revealed that the reserve prices play a crucial role in the design of the spectrum auction. This time there is an increase of 40% in the reserve price of the same band and apparently, no justification has been provided to the telecom companies.
It is uncertain whether all the telcos would participate in the upcoming auction which is scheduled to take place on 24th May 2017. With the increased base price, there is a looming danger of the failure of the said auction.
In response to the allegations of the price hike, PTA has responded that the base price was fixed by Auction Supervisory Committee keeping in view various influencing factors including; consultant report on market assessment, benchmarking with other countries, price ratio comparisons between different spectrum ranges, ecosystem development, handset prices and equipment cost.
The telecom operators also revealed that the investments with a significant magnitude like that of 4G spectrum require the approval of the respective Board of directors of prospective applicants as well as the Board of Directors of the shareholding groups. Thus, the companies are demanding more time and proposed that auction should be delayed by further 15 days.