Pakistan spectrum auction nets USD1.1bn, Zong secures only 4G licence

24 Apr 2014

Pakistan has completed the long-awaited auction of third- and fourth-generation (3G and 4G) concessions, awarding 3G licences to Mobilink, Telenor Pakistan, China Mobile Pakistan (CMPak/Zong) and Pakistan Telecommunications Mobile Ltd (PTML/Ufone), whilst Zong was the only winner of 4G spectrum rights. ProPakistani writes that Zong and Mobilink each won 10MHz in the 2100MHz band whilst Ufone and Telenor were awarded 5MHz apiece in the same range. Zong also walked away with a further 10MHz in the 1800MHz band for 4G services. Under the terms of the auction, providers were only eligible to bid for a 4G authorisation if they had won 10MHz of 3G frequencies, and whilst Ufone had also expressed an interest in bidding for 4G rights, its failure to secure a 10MHz 3G lot made it ineligible to bid for an 1800MHz licence. Ufone will have a second opportunity to acquire the frequencies, however, with sector watchdog Pakistan Telecom Authority (PTA) revealing that the unsold 4G licence would be sold off at a later date. The sale raised a total of USD1.112 billion for state coffers with the two 5MHz lots and the 4G lot each selling for their reserve prices of USD147.5 million and USD210 million respectively, whilst the 10MHz blocks sold for USD306.92 million and USD300.9 million, the Chinese provider paying the larger sum.

Commercial 3G services are expected to be made available within the next month, the cellcos having already deployed 3G networks in anticipation of the auction date. Capitalising on its 4G win, Zong has launched a new marketing campaign titling itself as Pakistan’s first and only 4G network, accompanying the programme with a change of logo. Whilst currently the smallest of the bidding cellcos in terms of subscribers, Zong’s 4G coup is expected to give the provider the edge needed to close the gap with its larger rivals. According to TeleGeography’s GlobalComms Database, Zong represented 18.0% of Pakistan’s wireless market at the end of 2013, compared to 28.2% held by Mobilink and 25.0% and 18.7% claimed by Telenor and Ufone respectively. Backed by China Mobile, the world’s largest cellco by subscribers, Zong is well-positioned to exploit its 4G advantage, benefiting from substantial economies of scale, especially given its parent company’s ongoing Time Division Long Term Evolution (TD-LTE) network rollout in China, and its imminent re-entry into the Chinese fixed broadband market. Indeed, CommUpdate noted earlier this month that Zong had also purchased licences to enter the fixed market in all 14 of Pakistan’s regions.

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