The government has approved renewal of licenses of two mobile operators at $450 million each while the third operator would have to pay $470 million.
According to the Ministry of Finance, the license renewal fee of telecom companies collected by Pakistan Telecommunication Authority (PTA) is a significant source of non-tax revenue for the federal government.
Due to stay orders given by the apex court, the collection of this renewal fee from two telecom companies which was budgeted in previous fiscal year had been delayed. However, with the efforts of the Adviser to Prime Minister, Dr Abdul Hafeez Shaikh, his team led by Secretary Finance and Pakistan Telecommunication Authority, due payment from the two companies has now been received by the government.
Kamal Ahmed, Chief Corporate Affairs Officer, Telenor Pakistan replying to 'Business Recorder said, "Staying committed to Pakistan and our 44 million customers, Telenor Pakistan confirms that it has made a sizeable payment of USD 224.6 million to the government of Pakistan towards renewal of its GSM license.
Telenor Pakistan believes that this significant FDI contribution is in line with its vision of social empowerment and will benefit the economy of Pakistan. As for the matter of license renewal, it is sub judice and we cannot further on the issue".
The development comes after the company voluntarily offered to pay under protest two weeks ago. Telenor Pakistan believes that this contribution is in line with its vision of social empowerment and will benefit the economy of Pakistan. As for the matter of license renewal, it is sub judice and we cannot further on the issue."
Cellular licenses were issued by PTA to two new cellular mobile operators ie M/s Telenor Pakistan and M/s Warid Telecom on May 26, 2004 for a period of 15 years, under the Mobile Cellular Policy, 2004, on payment of $291 million after auction.
Cellular license of M/s Paktel Limited, now China Mobile Pakistan (Zong), was also renewed by PTA under the 2004 Policy on October 23, 2004 for a period of 15 years on payment of $ 291 million. These licenses were due for renewal on May 25, 2019 and October 22, 2019 respectively. In 2014, the government of Pakistan renewed the license of Ufone at $291 million.
On August 21, Islamabad High Court (IHC) directed Telenor and Jazz for depositing 50 percent of license renewal fee ie around Rs 36 billion each in two weeks as guarantee.
The operators disagreed to the PTA decision on fixing license renewal fee. The operators had also requested for grant of stay order to avoid service disruption in the country after August 21, 2019-the date fixed by PTA for renewal of licenses.
The court had directed both the operators to deposit half of the amount ie 50 percent as guarantee till the final decision on the appeal of both cellular operators.
The PTA had rejected mobile operators' apprehensions relating to the price of license 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. However, Jazz and Telenor went into appeal against PTA decision.
The PTA has directed operators to pay their license fee before August 21, 2019 or their licenses will be termed expired and they will not be allowed to provide telecom services after the deadline.
Mobile licenses of Telenor and Jazz expired on May 26, 2019. The PTA has passed a verdict relating to license renewal of Jazz and Telenor, details for which are as following: fee for renewal of license 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; licenses 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 installments 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 license will stand expired, the terms and conditions relating to enhanced quality of service and coverage of network shall be finalized 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 license, it shall pay a fee on pro-rata basis of the renewal fee along with all other applicable fee and other charges of the license commencing from 26-05-2019 till the date of withdrawal/vacation of the radio frequency spectrum.
In an official statement, Telenor has stated that it would make significant payment towards license renewal to reaffirm its commitment to Pakistan. Telenor Pakistan voluntarily offers to pay $224.6 million under protest to safeguard the interest of its valued customers.
In order to reaffirm its commitment to the country, Telenor Pakistan, while preserving its legal rights, has offered to make a substantial payment of $224.6 million to the government to ensure continuity of services and preserve rights of over 44 million valued customers.
The GSM license of Telenor Pakistan which was to be renewed by 25 May 2019 had been delayed by PTA and faces further delays due to unfair demands on pricing and rollout obligations, which may significantly distort the competitive landscape in the industry.
Telenor Pakistan has been very keen towards timely renewal of its telecom license and, in the past two years, tried its utmost towards a fair and transparent outcome. The company's efforts in this regard sought to not only provide seamless telecom and digital services to the people of Pakistan but also contribute to the national exchequer.
Telenor Pakistan shall continue to pursue its legal case to fully protect its rights available under law, in order to have final resolution of the matter. The company remains hopeful of a fair outcome and looks forward to the government and PTA to fulfill its commitment to ensure fair competition and forward-looking policies and regulations.