Pakistan's spectrum auction will miss budget target

Pakistan’s failure to generate a good response to its next-generation mobile spectrum licence could mean the country will miss out on its budget targets for the year.

According to the country’s finance and IT ministry officials and telecom industry executives, the country is aiming to raise $2 billion from 3G to boost foreign reserves, but there has been limited interest in acquiring 3G and 4G network licences.

The auction is set to take place on April 23, and it is estimated the country will raise no more than $850 million from the auction.

An unnamed source within the government has reportedly said the country’s finance minister is “very angry”, and has threatened to call off the auction as it is so far behind its target, Reuters reports.

Pakistan remains one of the largest countries in the region not to offer 3G services, and is even lagging behind neighbouring war-torn Afghanistan, which switched to 3G in 2012.

Deregulation in Pakistan occurred in 2004 and there has been investment by some foreign players, including Etisalat, which has invested heavily in the country.

Mobile phone penetration is also high in Pakistan, with 132 million users, according to the Pakistan Telecommunications Authority (PTA).

The spectrum auction was announced in February with Pakistan saying it will sell both 3G and advanced 4G LTE spectrum.

The country’s finance minister Ishaq Dar estimated at the time that selling both 3G and 4G licences could raise between $4 billion and $5 billion

When bidding closed on Monday, four out of Pakistan’s five existing companies had submitted bids, but no new companies had shown an interest.

Operators Mobilink and Zong bid for 10MHz, while Telenor and Ufone bid for 5MHz. The country’s fifth operator – Warid Pakistan – did not make any bids.

International companies, including Turkcell and Saudi Telecom Company, failed to follow up on earlier interest.

Despite the negative reaction, Khurram Mehran, a spokesperson for the PTA said “the response received from four existing cellular mobile operators in Pakistan is encouraging and satisfactory”.

Bids for LTE licences were supposed to start at $210 million, but no operators showed an interest.

The 4G auction is now unlikely to generate any money, according to the source, meaning the auction could be put on hold.

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