(Updates with PTA response)
By Mehreen Zahra-Malik
ISLAMABAD April 15 A dismal response in this
week's auction for next-generation cellphone spectrum licences
means cash-strapped Pakistan will struggle to fund its budget
this year, finance and IT ministry officials and telecom
industry executives told Reuters.
Pakistan is set to hold long-awaited auctions for 3G and 4G
network licences on April 23, a step the government projects
will raise $2 billion to boost foreign reserves.
But officials said there has been scant interest in Monday's
bidding process and estimate Pakistan will raise no more than
"The finance minister (Ishaq Dar) is very angry, so much so
that he wants to call off the auction if we are so
embarrassingly off target," said an official on his team, who
declined to be identified as he is not authorised to speak
officially on the matter.
"This has happened because of an over enthusiastic IT
ministry which oversold an undercooked plan to its fiscal
managers. It looks like heads may roll on this one."
Pakistan is the only major country in the region that still
does not offer 3G services. Its neighbour, war-ravaged
Afghanistan, switched to 3G services in 2012.
There are about 132 million mobile phones in use in
Pakistan, a country of 180 million people, according to the
Pakistan Telecommunication Authority.
Pakistan's telecommunications market was deregulated in 2004
and foreign firms such as Etisalat have invested
The finance ministry said in February that Pakistan would
sell both the 3G and the more advanced 4G LTE spectrum. Selling
just 3G licences could raise $2 billion, and bundling them with
4G spectrum could generate between $4 billion and $5 billion,
finance minister Ishaq Dar had estimated.
The 3G spectrum auction was expected to raise Pakistan's
gross domestic product by $8 billion and indirectly create up to
900,000 new jobs, a government-commissioned study by Plum
But when bidding closed at 4 pm on Monday, only four out of
five cellular mobile companies operating in Pakistan had
submitted bids and no new companies showed interest, sources
privy to the bidding told Reuters.
Khurram Mehran, a spokesperson for the PTA, sent a statement
saying "the response received from four existing cellular mobile
operators of Pakistan is very encouraging and satisfactory."
Telecom companies Mobilink and Zong bid for 10 MHz. Telenor
and Ufone both bid for 5 MHz.
Warid Telecom Pakistan, owned by the privately-held
conglomerate Abu Dhabi Group, did not submit a bid, said a
source in the company. Neither did Turkcell and Saudi Telecom
Company, two foreign companies who had earlier shown interest.
"There are four available 3G blocks in 1800 MHz: two 10 MHz
and two 5 MHz. The base price for 10 MHz block is $291 million
and 5 MHz is $146 million," said a finance ministry official
close to Monday's bidding.
"The auction is thus expected to go for $863 million,
nowhere close to $2 billion."
Bids for 4G LTE licences were to start at $210 million. No
operator has shown any interest.
"It looks like 4G won't fetch any money," the finance
ministry source said. "The disappointing bids are deepening the
budget hole by almost $1.7 billion and are such a big hit the
finance minister is ready to postpone the whole auction
Spokesmen in the finance ministry, the IT ministry and
telecom companies taking part in the bid said they were not
authorised to officially comment on the issue.
The disappointing response will pile further pressure on
embattled Information Technology Minister Anusha Rahman, who is
overseeing the auction.
She drew criticism last month after appointing her husband
to the Board of Directors at Ufone, one of the companies bidding
for licences and partly owned by the government. He later
(Editing by Katharine Houreld and Jacqueline Wong)