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'SAMENA Daily' - News

Pakistan: 3G/4G auction will fetch over $1 billion investment

The combined base price value of 50MHz spectrum (3G/4G) will bring more than dollar one billion investment and will contribute towards the GDP growth of the country, said Syed Ismail Shah, Chairman of Pakistan Telecommunication Authority (PTA).

The PTA has taken extraordinary measures to avoid collusion and ensure transparency in the entire auction process, for which mechanism has been designed based on best international practices and in accordance with PPRA rules and regulations, said the PTA chairman while briefing media persons on 3G/4G auction here on Saturday.

"Based on the received sealed bid on April 14, 2014, it is now clear that the received demand is greater than supply therefore the final auction will be conducted on April 23, 2014 as planned," Ismail Shah said. The PTA chairman said that the PTA has chosen the Simultaneous Multiple Round Ascending (SMRA) auction mechanism in this case. The SMRA is the most preferred auctioning mechanism and is widely used in modern day auctions worldwide. It is also preferred over the traditional open cry out auctioning model as SMRA allows both auctioneer and bidder flexibility to simultaneously bid on lots of their choice, privacy and time to make educated decisions during the auction, said Ismail Shah, adding that some of the recent auctions conducted in United States, Sweden, Norway, Hong Kong and Canada were all SMRA based auctions.

According to the SMRA auction all lots are auctioned simultaneously over a series of rounds. In each round, bids are submitted in individual lots at the announced prices. At the end of each round, a standing high bidder is identified for each lot. The standing high bidder is committed to the lot and cannot withdraw. The standing high bidder is released from its commitment when outbid by another bidder. When a lot receives at least one bid, the price for the lot increases in the next round. The bid increments will be upto a maximum of 3 percent of the last bid price, which will be decided by the PTA after each round in consultation with the consultant, the PTA chief explained.

Due to non-availability of 3G/4G services in Pakistan till now, consumers have been deprived of these offerings. To bring individuals, information and mobile broadband services closer quickly and conveniently, the PTA is in the process of auctioning spectrum for Next Generation Mobile Services (NGMS), he added. A total of 50 MHz is being offered as part of the auction, where 30 MHz has been offered in the 2100 band and 20 MHz has been offered in the 1800 band. The auction is designed in two stages a) The Sealed Bid Stage for demand exploration b) The final auction on April 23, provided the demand received is greater than the supply.

Some salient features of the auction were that each bidder must show interest in a minimum of 10 MHz and a maximum of 15 MHz in the 2100 band. In order to be eligible for 10 MHz in the 1800 band, a bidder must win at least 10 MHz in the 2100. Exact lot configurations are being designed with maximisation of over all benefit in mind. The base price for 10 MHz in 2100 is $295 million and 10 MHz in 1800 is $210 million. These prices were calculated after extensive market assessment and spectrum valuation by the PTA consultant, Value Partners. A successful bidder must pay either 100 percent upfront or 50 percent of the winning bid amount within 30 days and remaining 50 percent with markup @ Libor + 3 percent will be paid in equal annual instalments over a period of 5 years. Licenses to successful bidders will be issued for a period of 15 years, the PTA chief said.

Offering both the 2100 and 1800 bands allows telecom operators flexibility to deploy both 3G and 4G networks and offer the most advanced mobile services to their customers. For the consumer, availability of high speed mobile broadband services in both urban and rural areas will encourage a more connected community and promote e-commerce related activities.

Ismail Shah said that the deployment of 4G technologies would also provide our engineers and technicians to acquire the latest skills and thus become competitive in the international market. The successful auction of this spectrum is expected to create over 900,000 jobs in the telecom sector and will have multiple benefits for the economy of Pakistan, he concluded.



Source: http://www.brecorder.com/market-data/stocks-a-bonds/0/1174976/

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