As the upcoming license auctions draw close, news flows in that global telecom giants are cosnidering to participate in the bidding process. Prospective bidders to enter the Pakistan telecom market were informed to 3G/4G/LTE advisory committee.

As reported by Dawn News, they include:

• AT&T of USA
• British Vodafone
• Japan’s DoComo
• Qtel of Qatar
• Roshan Telecom from Afghanistan

The report further streghtens Warid’s un-fit financial position for the bid. Also, Warid can possibly make a joint bid with some telecom firm from Malaysia. Qubee is also reported to be in talks with current market players for a joint bid.

Complete report from Dawn News follows:

At least nine telecommunication companies including four world majors are likely to participate in bidding due by end-March for third and fourth generation telecom licences in Pakistan, raising hopes for a better foreign exchange yield.

An advisory committee on 3G/4G/LTE led by prime minister’s adviser on finance Abdul Hafeez Shaikh was informed on Thursday that British Vodafone, Japan’s DoComo, AT&T of United States, QTel of Qatar and even Roshan Telecom of Afghanistan were preparing for bidding to be new foreign entrants in the country’s fast growing telecom industry.

The information, based on market intelligence, was put forward by Ministry of Telecommunication and Pakistan
Telecommunication Authority (PTA).

The advisory committee was also informed that among the existing players Ufone, Mobilink and Zong were keen to get the new licences to be available for 15 years. Another player Warid was not in a position to independently vie for the future licence due to financial constraints but was in contact with a leading Malaysian telecom firm for a joint bid, according to market intelligence.

Qbee another firm that currently operates wireless and internet services in Pakistan and Bangladesh was also reported to be making contacts with some market players for a joint bid.

The advisory committee, said these sources, discussed a proposal to appoint consultant or a consortium of consultants to assist the government in transaction structure and bidding process but was informed that this could delay the transaction in view of procurement rules while the government was interested in over $800 million sale proceeds during the current financial year.

The finance ministry was of the view that the government could exercise its right to bypass procurement rules to reduce time for the appointment of consultants because that would help the government to maximise sale proceeds. The committee members remained divided over the issue, Dr Abdul Hafeez Shaikh said the decision would be made in a couple of days after consultations with the ministry of law.

In the meanwhile, the PTA was directed to enhance its coordination with the major telecom players for wider participation in the bidding process. The committee decided to appoint a media consultant for the transaction. The committee also considered replies to objections raised by cross-party members of the senate over the base price fixed by the PTA for the bidding. It also decided to issue an international advertisement for competitive bidding.

The government plans to auction three 3G and one cellular licence for 1900/2100 MHz (3G/4G/LTE) band and 800 MHz Band. The base price for 3G licence to be effective for 15 years has been set at $210 million while the base price for cellular licence for 8 years has been set at $155 million.

Likewise, the earnest money to qualify for the bidding has been set at $31.5 million for each bidder of 3G and $23.25 million for cellular license. The spectrum capacity allocation has already been fixed for three 3G licences.

The bidders would be required to start their offers from the base price fixed by government with each increment of at least $2 million multiples. The successful bidder would be required to deposit 50 per cent of the auction price within 30 days of the auction and remaining 50 per cent in five equal instalments. The bidder would be allowed to launch its operations on 100 per cent payment of bid money.

The senators had objected to the bid price saying it was too low given the fact that cellular companies had paid $291 million per license in 2004 for 2G services (GSM), now considered an obsolete technology. The advisory committee was, however, told that base price did not mean a sale price that would go up on competitive bidding and reminded the senators that the base price for 2G licenses was set at $61 million that had increased to $291 through bidding.

The meeting was informed that base price for cellular licence was set at $155 million because it was being issued against the remaining 8 years period of the defunct Instaphone instead of other cellular licenses that were for 15 years. Even the bidding result for one GSM license would also go up.

The committee was informed that base price was arrived at after taking into consideration the 2004 auction result of 2G (GSM), expected service revenues, subscriber growth, economic growth, per capita income, political situation and population of the country.

via Dawn News

Many of us already know about the spectrum auction curruption case in India. A year back we did a post on the lessons we can learn from the case India. Now when the PTA are all set to kick the specturm launch in March end the Supreme Court accros the border has given its rulling, cancelling 122 Telecom Licenses of worlds second larget mobile subscirber market.

This is a big setback for international investers, let’s see how this will effect the upcoming license auctions in Pakistan.

More from Reuters below:

India’s Supreme Court on Thursday revoked all 122 telecoms licences issued under a scandal-tainted 2008 sale, a fresh embarrassment for the government and plunging the mobile network market of Asia’s third-largest economy into uncertainty.

The ruling is a setback for Prime Minister Manmohan Singh’s government, which oversaw the sale of the licenses at below-market prices, costing the exchequer up to $36 billion in lost revenues.

The licences affected by Thursday’s ruling include all of those held by Unitech Wireless, the Indian joint venture of Norway’s Telenor and Unitech.

“We have been unfairly treated as we simply followed the government process we were asked to,” the Telenor joint venture said in a statement. “We are shocked to see that Uninor is being penalised for faults the court has found in the government process.”

The telecoms scandal is the biggest of several that have emerged during Singh’s second term and triggered massive street protests last year. Two ministers, including former telecoms minister Andimuthu Raja, who presided over the 2008 grant process, have resigned. Raja is in jail awaiting trial.

“This country is no longer willing to allow these corrupt corporations and these corrupt public officials to retain the benefits of their illegal and corrupt actions,” said Prashant Bhushan, a lawyer and petitioner in the case.

India is the second-largest cellular market in the world by subscribers, with 894 million at the end of December, although the market is crowded with more than a dozen operators, making call rates among the lowest in the world and squeezing margins.

Investors and operators have long been calling for consolidation in the crowded industry, and Thursday’s ruling stands to benefit the country’s biggest operators, including Bharti Airtel and Vodafone.

“Players like Bharti Airtel and Idea Cellular with popular brands and strong balance sheets will be clear beneficiaries because they can take advantage of this situation and increase market share,” said Jagannadham Thunuguntla, Head of Research, SMC Investments and Advisors, Mumbai.

Stocks in telecoms companies including Reliance Communications and Unitech fell after the verdict, but shares in Bharti Airtel jumped.

“For foreign investors, it is a very bad news. What mistake did they do? They partnered with Indian companies, invested lots of money and followed the process of that time,” said Rishi Sahai, director at consultancy firm Cogence Advisors in New Delhi.

The Supreme Court said the current licenses will remain in place for four months, in which time the government should decide fresh norms for issuing licenses, a lawyer involved in the case said.

India’s image as an investment destination was dented over the past year as the economy slowed, government reforms stalled and the telecoms scandals along with other high profile graft cases heightened concerns about government policies.

“This is a collective failure of the government of India, said S ubramanian Swamy, an opposition politician who brought the petition to revoke the license. ” The court has said that the government must now get the market value of these licenses .”

Loop Telecom Pvt Ltd and Videcon Telecommunications, part of India’s Videocon group are also affected, along with Etisalat DB, the joint venture between Abu Dhabi’s Etisalat and India’s DB group; and S-Tel.

Thirteen licences held by Idea Cellular and three held by Tata Teleservices are also affected.

via Reuters