Amid a tortured process which almost led to Pakistan’s 3G auction being cancelled, the spectrum sale has gone ahead, with China Mobile emerging as the country’s first 4G carrier.
Four of Pakistan’s existing cellcos - Zong, Ufone, Mobilink and Telenor - gained a 3G license while China Mobile’s local subsidiary, Zong, also purchased national spectrum in the 1.8-GHz band – anointed this week by the GSA as the world’s most popular for LTE. It promptly proclaimed itself "Pakistan's first and only 4G operator,” adding: "Zong is committed to providing the fastest mobile internet and best 3G/4G network in Pakistan.”
The Pakistan Telecommunication Authority (PTA) sold 3G frequencies in 2.1-GHz and gave the winners the option of also buying 1.8-GHz licenses, but only Zong took up that offer, despite speculation that Pakistan would be one of the countries, slow to 3G, which would choose to leapfrog straight to 4G. Only the fifth cellco, Warid, which stayed away from the auction, is choosing that route.
Warid, an early Wimax mover with its Wateen unit in Pakistan, plans to deploy LTE in five cities this year, initially using its existing 1.8-GHz GSM holdings. That move enabled it to save outlay on 3G licenses. Warid is reported to be planning LTE launches in Islamabad, Lahore, Faisalabad, Multan and Karachi. It could also potentially migrate Wimax spectrum in 2.5-GHz to TD-LTE in future, creating a common ecosystem with Indian carriers.
The main reason for the other cellcos saving their money and sticking to 3G at this stage is the cost of LTE handsets. A PTA official commented: “Launching LTE services is a difficult proposition as LTE handsets are very expensive; 3G handsets are more common in Pakistan as well as the rest of the world.” Of course, Zong will be able to tap into the massive buying power of its parent to secure lower cost devices, particularly from the Chinese ecosystem, which is moving towards low cost LTE smartphones during this year.
In the latest auction, four blocks if 2.1-GHz spectrum raised US$902.8 million in total. According to the PTA website, two operators agreed to pay over $300 million each for 10MHz of spectrum and two paid $147.5 million each for 5MHz. The PTA had originally said the minimum lot would be 10MHz, but changed the rules during the process, presumably to keep smaller or poorer players in the game. The regulator has not yet announced which operator won which frequencies, or the details of the 1.8-GHz sale, but if Zong paid the reserve price of $210 million, the state probably raised a total of $1.1 billion from the whole auction. The government had previously estimated that the 3G and 4G auctions could potentially raise up to $5 billion.