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Govt lays down payment schedule for 3G-4G auction

Govt lays down payment schedule for 3G-4G auction govt lays down payment schedule for 3g-4g auction govt lays down payment schedule for 3g-4g auction

Learning from past experiences, the Ministry of Information Technology has laid down a stringent payment schedule before the mobile operators, for the 3G and 4G spectrum auctions that will be held a little over a month from now.

“Mobile operators had inflexible payment schedules in the last auction of the licences. The government gave the operators 15 years to pay the bid prices, without charging any interest rates or late fee fines,” said State Minister of Information Technology and Telecommunications Anusha Rehman.

She was addressing a press conference held to announce that the process of holding the auction through an information memorandum had been finalised and that the government was ready to hold the auction on April 23.

Nonetheless, according to Anusha Rehman, all the stakeholders are on board and have agreed to the payment schedule.

Winners of spectrums will now either pay full amount, up front, or pay a minimum of 50 per cent. The operators will be required to make the remaining payments in five equal instalments within five years, with an interest rate of London inter-bank offered rate (Libor) plus three per cent.

To safeguard their interests, cellular mobile operators had demanded the government not to hold any other auction for the next five years.

“We could not agree to this condition because the government could not tie its hands down, especially when Pakistan is already late in launching 3G and 4G spectrums in the region and the people of Pakistan have been deprived of the latest technologies.

However, we have decided not to hold any auction for new spectrums for the next 18 months,” the state minister explained.

Giving details of the financial matters, Anusha Rehman explained that the transactions will be made in US dollars or equivalent Pakistani rupees.

“If the auction winner intends to pay the remaining balance amount before the end of five years, it would be acceptable without any pre-payment penalty,” she said.

However, two per cent surcharge per month will have to be paid on delayed payments, by the bidders, she said, adding that the licence would either be suspended or terminated if a licence holder fails to make the payments.

Anusha Rehman also shared an international study which states that the gross domestic product (GDP) of Pakistan would increase between Rs380 billion and Rs1.2 trillion in the next six years, yielding additional tax revenue for the government between Rs23 billion and Rs70 billion.

“The benefits also include generation of around one million jobs in the next five years,” said the state minister, explaining how a new field of content development would emerge.

The base price set is at $295 million for 10 MHz spectrum in the 1.9/2.1Ghz frequency band.

In the 1,800 MHz frequency band, the base price for 10 MHz is set at $210 million and $291 million has been set for 8.38 MHz spectrum in the 850 MHz frequency band. The auction will be open for media.

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