Four bidders in race; auction today
TAHIR AMIN
ISLAMABAD: The government is all set to go for the long-awaited 3G/4G spectrum auction today to generate over $1.3 billion non-tax revenue, besides introducing latest technology, official sources said.
Pakistan Telecommunication Authority (PTA) has finalized all the arrangements for the auction where a total of 50MHz is being offered for this purpose, of which 30MHz has been offered in 2100 band and 20MHz has been offered in the 1800 band. The auction is designed in two stages — a) The Sealed Bid Stage for demand exploration and b) Based on the received sealed bids on April 14, 2014 it is clear that received demand is greater than supply, therefore, the government is going for the final auction.
Four bidders have qualified to participate in the spectrum auction of Next Generation Mobile Services (3G/4G) and they include China Mobile (Zong), Mobilink, PTML (Ufone) and Telenor Pakistan. However, no new entrant is participating in the auction process.
PTA has taken extraordinary measures to avoid collusion and ensure transparency in the entire auction process, whereas the mechanism has been designed based on best international practices and in accordance with the PPRA rules and regulations. The Authority has chosen the Simultaneous Multiple Round Ascending (SMRA) mechanism for the auction. 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 the PTC Chairman 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 will be submitted on 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 PTA after each round with the help of Consultant.
Some salient features of the auction are that each bidder must show interest in a minimum of 10MHz and a maximum of 15MHz in the 2100 band. In order to be eligible for 10MHz in the 1800 band, a bidder must win at least 10MHz in the 2100. Exact lot configurations are being designed with maximization of overall benefit in mind. The base price for 10MHz in 2100 is $295 million and 10MHz in 1800 is $210 million. A successful bidder must pay either 100pc upfront or 50pc of the winning bid amount within 30 days and remaining 50pc with markup @ Libor + 3pc will be paid in equal annual installments over a period of 5 years. Licenses to successful bidders will be issued for a period of 15 years.
