Millicom International Cellular (MIC), the parent company of wireless operator Paktel, has announced that an agreement has been reached with the Pakistani telecoms regulator, the PTA, which will allow the cellco to switch on its GSM network immediately. The agreement will renew Paktel’s licence for a further 15 years from 23 October 2004.
Under the terms of the agreement, Paktel will pay 50% of the USD291 million licence fee in installments over a three year period, while the remainder will be payable in ten, yearly payments beginning 2008. Payments already made by Paktel (which amount to USD14 million) will be treated as the first down payment towards the new licence. As a sweetener to the deal, Paktel has also been given additional 1800MHz spectrum, increasing its total from 10MHz to 13.6MHz.
The agreement settles a long-running argument between the country’s smallest cellco (390,000 customers at mid-2004) and the regulator. Paktel has been around since 1991, when it launched an AMPS network. In February 2003 it was granted a GSM-900 licence free of charge, and the following September Pakistan’s Frequency Allocation Board granted it the necessary spectrum. Soon after the company began making plans to migrate its network from analogue to digital, however, the government introduced a new policy for the wireless industry, and in April 2004 licensed two new players, Telenor Pakistan and Warid Telecom which both paid USD291 million for the concessions. Paktel was asked by the PTA to match the figure, as its original licence was due to expire in 2005, but the cellco refused. Indeed, in August 2004 it filed a lawsuit against the PTA, claiming that the regulator had no right to demand the payment. Paktel’s appeal was thrown out by the High Court in Lahore just days later, leaving it with no option but to negotiate an agreement with the PTA.
Having switched on its GSM network, Paktel now competes on a level footing with existing GSM network operators Mobilink and U-Fone. Competition will intensify in 2005 with the launch of Warid Telecom and Telenor Pakistan. The former is backed by a group of UAE-based investors, including the Abu Dhabi Group, led by His Highness Sheikh Nahayan Mabarak Al Nahayan. Its chief operating officer Hamid Farooq says the company plans to launch phase one of its rollout in the first half of next year and has earmarked USD140 million to USD150 million in investment. It hopes to install a network with capacity for 1.5 million customers. Meanwhile, Telenor Pakistan, a wholly owned subsidiary of Norway’s Telenor, plans to launch by 1 April 2005, covering 70% of Pakistan’s population by its fourth year of operation. In July 2004 it selected Nokia to build out its network; the deal will include the facility to seamlessly upgrade to a 3G network based on W-CDMA technology.