Telecom Sector Likely to Attract Huge FDI in 2HFY12

by Yasir Ameen

The auction of four new licence for 3G/4G technology along with remaining privatization amount of Pakistan Telecommunication Limited (PTCL) will attract one and half billion Foreign Direct Investment (FDI) safely by end of financial year 2011-12.

The base prices totaled $785 million of the four licences whereas PTCL remaining privatization amount is $800 million, totaling $1.585 billion FDI. The licence prices will further increase depending upon the bidding process and interest of participants.

The auction set to be held for 3G/4G licences on March 28-29 separately for spectrum of 800MHz and 1900-2100 MHZ for period of eight and 15 years respectively, with expectation that participation will maximum in numbers by existing and new foreign and local players.

According to Information Memorandum, the licence for 800 MHz license shall be issued after payment of first 50 percent of the initial spectrum fee within 30 working days from the auction date. The remaining 50 percent of the licence price shall be deposited in 5 equal annual installments payable in US$ or equivalent in rupees.

The licence fee will be determined equally for three spectrum of 1900/2100 MHz, that is, the highest will be paid by winning bidders. The licence shall be awarded after payment of 100 percent of the auction winning price within sixty 60 working days from the date it is offered to the bidder.

Moreover the Ministry of Finance held meeting with official of Etisalat for obtaining $800 million, which was pledged to be paid before end of the current financial year 2011-12.

The federal government has transferred 90 percent of the properties to the PTCL’s controlling management whereas it fulfilled its commitment not to give new working licence to any operator under agreed condition of privatization.

Hence it is expected that Etisalat will pay the remaining amount of purchased shares this year.