Two mobile phone operators move IHC for order to continue service

The News

ISLAMABAD: In an unfortunate turn of events, two of the biggest mobile operators Jazz and Telenor have moved Islamabad High Court for an injunction to continue service beyond May 25th when their 15 year license period ends. The case has been fixed before the court of Chief Justice Justice Athar Minallah for hearing on urgent basis on Monday May 6th.
Both operators had applied for renewal of licenses 30 months in advance to PTA as per license terms and conditions at time of acquiring license in 2004 for US $291 million each. The renewal was to be done on basis of consultative process to determine a fair price for renewal for another 15 years. In early 2017, PTA started the process to prepare the renewal framework. Thereafter PTA started process to hire a consultant to formulate different conditions and benchmarks to undertake a consultation round with two operators to renew license. However due to ensuing political crisis in country, weakening of writ of the government, different stakeholders tried to influence the process to select the consultant. NAB also stepped in and the situation got further murkier. The Chairman PTA Dr Ismail Shah term ended inbetween and PTA without a regular head and end of government, caretaker setup and a new government settling in, the consultation process never took off.
It’s a very undesirable situation as the global headquarters of foreign owners of both operators wait with bated breath about the deadline for end of their license term. This reflects badly on the business handling in Pakistan at a time when the government is striving to bring new foreign investment and focusing on ease of doing business. After different rounds between regulatory bodies to settle benchmarks for renewal in last one year, the government has again gone back to drawing board and made a five member inter-ministerial committee to finalise a policy directive to PTA to determine a fair price for renewal.
Telenor and Jazz believe that the license should be renewed for USD 291 million because state owned mobile operator got renewal at this price for 15 years in 2014. They believe that it won’t be fair if they pay a higher price and compete with state owned operator for remaining 10 years of state owned operator.
The government side apparently has built its case on the last auction of 900 Mhz and 1800 Mhz bands in 2016 and 2017. Back then, Telenor bought 10mhz in 850band for USD 395 million and Jazz bought 10mhz in 1800band for USD 295 million. The Renewal spectrum mix for both operators is 4.8Mhz in 900 MHz band and 8.8mhz in 1800mhz band. As per last auction the price per Mhz works out to be USD 39.5 million per Mhz for 900band and USD 29.5 million per Mhz for 1800band. Keeping in view the spectrum mix for renewal, the total price for renewal of license for each operator works to be nearly USD 450 million. However both operators other than the issue about issuance of license at 2004 license price to state owned operator in 2014 and their willingness to pay same price for renewal, point out that auction price cannot be made a benchmark for a renewal as per global practices. And that the delay in a meaningful consultation process for which a reasonable period of 30 months was given in 2004 license did not conclude because of their fault. The government side believes that its not possible to renew a license in 2019 at a price which was fixed in 2004 and are apprehensive of NAB and media.
PTA has issued a clarification on May 4th stating that since early 2017, Ministry of Information Technology and Telecomm (MolT&T), PTA and other stakeholders mainly Cellular Mobile Operators (CMOs) have been engaged in a consultative process for License Renewal Framework as per the relevant provisions of the License conditions and Telecom Policy 2015. After due deliberations, government of Pakistan has formed a high-level committee to finalize the framework keeping in view the recommendations from PTA and input from CMOs. The process is being handled with requited urgency at all levels and will be completed soon.
All procedures related to License Renewals shall be based on established benchmarks, policy principles and market dynamics of Pakistan so that the GoP, consumers and CMOs continue to benefit. The apprehensions expressed about any service disruption or customer inconvenience due to delay in finalisation of renewal process are unfounded. PTA is committed to safeguard the rights and interests of consumers. However, with a customer base of nearly 102 million for Telenor and Jazz out of total 159 million in Pakistan including high end mobile broadband 3G/4G users (total 36 million out of 66 million for both operators) and with foreign investors, the situation is much more grave than PTA press release of May 4th makes out to be. The government has an experienced and enthusiastic economic team which is trying to grapple many issues on economic front but somehow due to difference of opinion on policy matters between different regulatory bodies and government own pre occupation with economic, political and regional issues has led to this impasse.
Hopefully collective wisdom will prevail and a workable win win formula will be settled between the two operators and government of Pakistan. For now, all eyes on Islamabad High Court for a review of the whole matter and directions if any on Monday.

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