Pakistan Raises $1.13 Billion in Auction for 3G, 4G Spectrum

Pakistan raised $1.13 billion in an auction of licenses to run third- and fourth-generation mobile-phone networks that will help boost the country’s foreign reserves in an economy hit by energy shortages.

Pakistan Telecommunication Authority, or PTA, sold 3G licenses to four existing operators -- the Pakistan unit of China Mobile Ltd., Pakistan Mobile Communications Ltd.’s Mobilink, Telenor ASA’s local subsidiary and Ufone of Pakistan Telecommunication Co. -- Finance Minister Ishaq Dar announced at a press conference after the auction held in Islamabad. China Mobile also won a 4G license.

“The new technology will benefit Pakistan’s industries and businessmen and will create thousands of jobs,” Dar said. “The auction was pending for the last four years.”

The sale will help the government’s efforts to boost foreign reserves as Prime Minister Nawaz Sharif seeks to revive South Asia’s second-biggest economy hurt by chronic energy shortages and a Taliban insurgency. Pakistan aims to increase reserves to $15 billion by Sept. 30, Dar said April 16. Current reserves, held by the central and commercial banks, stood at $11.67 billion as of April 16.

The telecommunications market was deregulated in 2004, and the number of mobile-phone users in the South Asian nation grew to 132.33 million as of January from 12.7 million in 2005, according to the PTA.

Successful bidders must pay either 100 percent upfront or 50 percent of the winning bid amount within 30 days and the remaining 50 percent with markup at the rate of Libor plus 3 percent will be paid in equal annual installments in five years, the PTA said on its website. Licenses will be issued for a period of 15 years.

The government was expecting to fetch $1.2 billion to $2 billion from the spectrum auction.

The regulator has yet to decide whether to leave it to the market to determine the tariff or employ regulatory intervention, PTA Chairman Syed Ismail Shah said Dec. 19.

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE