Mohsin Siddiqui (Chief Reporter)
The country is poised to face a significant shortfall of around Rs32 billion in non-tax revenue from 5G licenses for the outgoing fiscal year 2023-24. This shortfall arises due to the non-materialization of the spectrum auction, a situation exacerbated by prevailing economic and political challenges.
The government had projected a revenue of Rs72.597 billion from 4G and 5G licenses for the current fiscal year, a marked increase from the Rs50 billion budgeted for the previous fiscal year, which was later revised upward to Rs74 billion. However, the Pakistan Telecommunication Authority (PTA) has only received Rs30.94 billion against a budgeted amount of Rs40.90 billion for the financial year 2023-24. The remaining Rs32 billion, which is accounted for in budget documents, remains unrealized.
Multiple administrations, including those led by the Pakistan Tehreek-e-Insaf (PTI), the coalition/Pakistan Democratic Movement (PDM), and the caretaker governments, have made substantial efforts to initiate the process and launch 5G services in the country. Despite these efforts, the political environment and economic challenges have delayed the process. The availability of sufficient spectrum for future auctions remains, but Cellular Mobile Operators (CMOs) have adopted a cautious approach due to economic uncertainties and market conditions related to the 5G rollout.
Several factors have contributed to the hesitation among CMOs, including low handset and Optic Fibre Cable (OFC) penetration, low Average Revenue Per User (ARPU), and rising Operating Expenses (OPEX) coupled with high taxation. These challenges make it difficult to launch 5G services effectively.
International projections indicate that by the end of 2026, 5G will attract 3.5 billion subscriptions, generating approximately 45 percent of the world’s total mobile traffic data. Despite this promising outlook, the completion of the 5G auction in the current calendar year remains a formidable challenge. The government estimates that it will take approximately eight to ten months, in line with the Public Procurement Regulatory Authority (PPRA) regulations, after issuing the policy directive to complete the 5G launch process in the country.
The launch process for 5G begins with the government communicating its intentions to all stakeholders and preparing a draft policy directive. This policy must be approved by the Economic Coordination Committee of the Cabinet (ECC) and then by the federal Cabinet, chaired by the Prime Minister. Once approved, the policy is shared with the PTA and the Frequency Allocation Board (FAB). The FAB is responsible for specifying frequency bands, while the PTA conducts the necessary processes.
Upon receiving the policy directive for the 5G auction from the Ministry of Information Technology and Telecommunication, the PTA issues a Request for Proposal (RFP) for consultancy services for the auction. This stage takes about two weeks, with an additional week required for advertisement and processing through embassies in countries such as the US and the UK. According to PPRA rules, completing this process requires 30 days, totaling around two months to reach this stage.
Following the submission of bids, the process includes two weeks for technical evaluation and the opening of financial bids. If any objections arise, an additional 10 days are allotted for resolution before an agreement is signed with the qualified consultant. The hired consultant will oversee the auction, ensuring it is conducted transparently, professionally, and profitably.
The consultant then requires at least two months to complete their report, which is submitted to the auction advisory committee. After approval, the report is sent to the ECC and subsequently to the Cabinet for final approval of benchmarks, prices, and bands. Reaching this point takes over six months from the start date.
Following these approvals, the PTA publishes the Information Memorandum (IM), a process that takes 45 days as per the rules. This timeline brings the total duration to over eight months. Afterward, the auction is held, and the spectrum award and payment process takes another 30 days. These deadlines assume an ideal situation without objections or court interventions, according to officials.
