Pakistan Auctions Cellphone Licenses for $1.12 Billion

By Syed Shoaib Hasan 

KARACHI, Pakistan--Pakistan has auctioned five next-generation cellphone licenses for $1.12 billion, officials said Wednesday, in what was seen as a test of the government's ambitious plan to revive the country's beleaguered economy.

Pakistani officials denied that the result of the auction of 3G and 4G spectrum was below expectations.

Finance Minister Ishaq Dar said in recent days that $1.3 billion was the "floor price," while in preceding months he had spoken about the auction raising several billion dollars.

Ismail Shah, the chairman of the Pakistan Telecommunications Authority, which oversaw the auction, said that a sixth license was yet to be sold, which would fetch at least $200 million more, perhaps up to $500 million.

"If you consider we have one 4G license left, we had a very good auction, which matched our expectations," said Mr. Shah.

The auction didn't attract any new entrants to the cellphone market in Pakistan, with all the licenses going to existing operators. Pakistan had lagged behind the rest of the region, where all the major countries already have 3G services. The previous government had planned to sell off the spectrum but never managed it.

The licenses were purchased by four of the five telecom companies operating in Pakistan. Norway's Telenor, Russian-owned Mobilink, China's Zong and the Pakistan government-owned Uphone successfully bid for 3G licenses, while the solitary 4G license went to Zong.

The current government of Prime Minister Nawaz Sharif, in power since June, sees economic growth as its top priority but continues to struggle against extremist violence that scares away investment.

Analysts welcomed the outcome of the auction.

"I think this is a good deal for everybody," said Mohammad Tahir Saeed, an analyst at Topline Securities, a Pakistani brokerage firm. "The government has achieved its budgeted amount and the customers will not feel that much of a pinch that they would have if the prices were higher for the licenses.

"I think it will generate more jobs and income, especially in the software and banking sectors."

A report commissioned by the government from Plum, a U.K. consulting firm, had estimated that the launch of the 3G spectrum would create 900,000 more jobs and add $8 billion to GDP over a six-year period.

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