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Pakistan Telecommunication Authority (PTA) has rejected mobile operators' apprehensions relating to the price of licence renewal and passed an order while fixing the fee for license renewal at $39.5 million per MHz for frequency spectrum of 900 MHz and $29.5 million per MHz for frequency spectrum of 1800 MHz.

The PTA said that it passed the order in compliance with the court order dated 21-06-2019 passed by the Islamabad High Court (IHC), where PTA was asked to make a decision and announce terms for renewal of telecom licences.

The PTA has directed operators to pay their licence fee before August 21, 2019 or their licences will be termed expired and they will not be allowed to provide telecom services after the deadline.

Mobile licences of Telenor and Jazz expired on May 26, 2019. Usually, the process for renewal of licences starts at least 18 months before the deadline. During the time, telecom operators, PTA consultants and other stakeholders sit and discuss various aspects of the renewal, including the price of the licence.

This time around, however, PTA was unable to communicate anything to operators until the first week of May 2019 and that's when Telenor and Jazz approached Islamabad High Court with a plea that PTA should be asked not to block their services due to expiry of licences and that PTA should formulate the mechanism for renewal of licences at a fair price.

The Islamabad High Court, in response to the petition, ordered PTA to decide the terms for the licence renewal at the earliest and operators should be given sufficient time to get their licences renewed.

In line with the IHC order, the PTA passed a verdict relating to licence renewal of Jazz and Telenor, details for which are as following: fee for renewal of licence shall be US $ 39.5 million per MHz for frequency spectrum of 900 MHz and US $ 29.5 million per MHz for frequency spectrum of 1800 MHz; licences will be renewed with effect from 26th May, 2019 for a period of further fifteen (15) years, on a technology-neutral basis, subject to the payment of renewal fee to be calculated in accordance with per MHz price as mentioned above, the payment terms for the renewal fee shall be 100% upfront or 50% upfront with the remaining 50% in five (5) equal annual instalments on LIBOR plus 3%, the payment can be made in US dollar or in equivalent Pak rupees calculated at the market exchange rate at the time of payment, the upfront payment, as given above, shall be paid on or before 21-08-2019.

In case of non-payment of upfront fee, the licence will stand expired, the terms and conditions relating to enhanced quality of service and coverage of network shall be finalised in line with applicable regulatory practice and 2015 Policy after consultation with the licensee on or before 21-08-2019, in case, the licensee opts for non-renewal of its licence, it shall pay a fee on pro-rata basis of the renewal fee along with all other applicable fee and other charges of the licence commencing from 26-05-2019 till the date of withdrawal/vacation of the radio frequency spectrum.

The Authority concluded that there is no dispute on renewal of the licence. Both the authority and licensee are agreed and intended to proceed for renewal of licence. The main issue in the instant matter relates to determination of the renewal price in the light of various factors and approaches/models. Various jurisdictions have adopted different approaches i.e. through auction or market-based price, for renewal of licence associated with spectrum. In Pakistan, spectrum price is being determined through auctions. The latest spectrum price in similar bands was determined through auctions held in years 2016 and 2017.

The said spectrum price can fairly be considered as a benchmark for renewal of the licence associated with similar spectrum as market-based price. Quality of service as well as rollout obligations is required to be enhanced in consonance with 2015 Policy and with the best regulatory practices.

However, the licensee's concerns on terms and conditions regarding enhanced quality of service and rollout obligations are being evaluated and require further consultation with licensee and the same shall be finalised after consultation with the licensee.

Copyright Business Recorder, 2019

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