Government Hoping to Raise $1.6 Billion
March 14, 2014
KARACHI, Pakistan—Pakistan said it would auction next-generation cellphone licenses on April 23, in a move that the government hopes will raise at least $1.6 billion and create new jobs.
Pakistan is the only major country in the region that still doesn't offer 3G services, surpassed even by war-torn Afghanistan. It will sell both the 3G and the more advanced 4G LTE spectrum, government officials said.
The auction is part of a series of measures that the government of Prime Minister Nawaz Sharif is adopting to spur the country's stagnant economy and attract investment.
"We expect to receive bids for up to five licenses for 3G and 4G LTE bandwidths. Gauging from the interest so far we hope that the revenues will be more than estimated," said Syed Ismail Shah, chairman of the Pakistan Telecommunication Authority.
The country's Finance Minister Ishaq Dar approved the auction at a meeting in Islamabad on Thursday.
A government-commissioned study by Plum Consulting forecast that the 3G spectrum auction could raise Pakistan's gross domestic product by $8 billion and indirectly create up to 900,000 new jobs.
The government said that bids for 3G license will start at $295 million, and for 4G LTE licenses at $210 million. Mr. Dar said in a recent Wall Street Journal interview he is hoping the process would rake in as much as $2 billion.
Currently, Pakistan has five telecom operators. At least four of them are expected to participate in the bidding process.
"The entire process was carried out in a very clear, transparent and professional way and we are satisfied with it," said Omar Manzoor, spokesman for Mobilink, Pakistan's largest cellular operator.
In addition to existing operators, a Turkish and a Middle Eastern operator expressed interest, Mr. Shah said.
Officials and telecom operators said that 3G services could come online within a few weeks of the auction.
"There is a consensus now among all the stakeholders that the auction should proceed quickly," said Mohammad Tahir Saeed, an analyst at Topline Securities, a Pakistani brokerage firm. "Apart from the telecom industry, it is the services sector that stands to benefit the most once the 3G network starts operating."
Pakistan has about 132 million cellphone users, but only 15 million of them use the slow mobile Internet currently available in the country.
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