April 2004 updates

Two cellular phone licenses awarded in Pakistan for US$291 million each
By Jamshed Masood in Islamabad, Pakistan. April 2004.

Pakistan awarded two new cellular licenses at US$ 291 million each in a keenly contested auction held in Islamabad this month. The auction price exceeded all expectations and confirmed Pakistan as a major growth market in the region following de-regulation of the telecom sector. The two licenses were won by Telenor ASA of Norway, which is one of the leading European operators with wireless operations in over 10 cities including Thailand and Malaysia, and M/s Space Telecom, another international consortium comprising SyriaTel, a leading mobile operator in Syria; Attock Group managed by Dr. Ghaith Pharon, which has stakes in the oil and energy sector in Pakistan; and other shareholders from Holland and the UK.

The bidding process was participated by nine consortia: WorldCall Communications, Fauji Foundation-AWT-Spell Telecom, Warid Telecom of UAE, Rupali Group, Investcom Holdings Luxemburg, Sabafon, Dubai Internet City consortium in addition to the winning bidders. Telenor's offer opened with a bid of US$ 161 million followed by Warid Telecom of US$ 151 million, Fauji Foundation of US$ 140 Million, World Call of US$ 130 Million. PTA then asked the top five bidders to increase their bids. A keen contest followed where Space Telecom emerged as the highest bidder with US$ 291 million, followed closely by Telenor at US$ 290 million. The third company to exit the race was Warid Telecom of UAE which decided not to raise their bid beyond US$ 280 million. PTA next asked Telenor to match Space Telecom's bid of US$ 291 million at which point the bidding was declared closed.

The two successful bidders plan to begin operations within one year and will be giving tough competition to the incumbent operators which include the dominant operator Mobilink, owned by Egypt-based Orascom Telecom. Mobilink has over 2 million subscribers. The other three operators are Ufone, a wholly owned subsidiary of state-owned Pakistan Telecommunication Co with a current subscriber base of half a million, Paktel and Instaphone - both majority-owned by Millicom International. Because of the latest bidding for the new cellular licences, the existing operators will be obliged to pay US $291 million for the renewal of their licences at the end of their current contractual terms. The licences of Paktel and Instaphone expire next year. The cellular mobile sector is set to attract about US$ 1.5 billion worth of investments in infrastructure over the next two years.