3G & 4G Licence auction fetches $1.12bn

ISLAMABAD: The auction of 3G and 4G licences has made Pakistan nearly $1.12 billion or Rs111 billion richer, putting it very close to the expected $1.2 billion target the government had set for itself in the budget for FY2013-14.

The government had expected to make Rs120 billion and was counting on revenue from the telecom auction to balance the budget, instead of focusing on revenue generation through widening the tax net.

Finance Minister Ishaq Dar managed to ensure inflows of foreign exchange through the auction of next-generation mobile technology to keep the budget deficit at its projected target of 6.3 per cent for the year 2013-14.

The government is set to receive half of the proceeds from this auction as an upfront payment of nearly $556 million, which is expected to be deposited in the national kitty by next month. The remaining amount will be recovered in five equal instalments in five years with interest rate of three per cent LIBOR plus.

Following the auction, Mr Dar said the final bidding price was in line with initial estimates and far higher than those projected by previous governments.

Pakistan has been waiting nearly a decade to reap the benefits of high-speed mobile internet. In 2010, revenue from such an auction was projected to be Rs50 billion. In 2011, the projection went up to Rs75 billion and then Rs79 billion in the year 2012-13. But none of these projections could materialise because the government of the day failed to auction the 3G and 4G licences.

Next door neighbour Afghanistan, despite having a weaker economy and a similarly fragile security situation, has been 3G-equipped since 2012. The technology is prevalent in nearly 150 countries worldwide.

As per the break-up announced by the Pakistan Telecommunication Authority (PTA), the auction of four 3G licences — two in the 10MHz category and two in the 5MHz category — fetched $902.82 million. Zong’s acquisition of a 4G licence added another $210 million.

A PTA official told Dawn that Zong offered $306.920 million, the highest bid, for 10 MHz 3G and a 4G licence.

Following the bidding, Mr Dar said at a press conference that one 4G licence was still up for grabs and would be auctioned later. He stressed that future auctions would also be held in a transparent manner.

Source; Dawn NEWS