Pakistan learns from lessons of other nations to deliver successful spectrum auction

Tuesday 3rd June, Value Partners Management Consulting, the firm responsible for the planning, design and execution of Pakistan’s recent Next Generation Mobile Services Auction (NGSMA), has revealed how its collaboration with the Pakistan Government, the operators and other key stakeholders has paved the way for social and economic development in the country. Value Partners ensured that the auction achieved forecasted revenues, was delivered on schedule and that the entire process was fair and transparent.

Following a competitive tender, Value Partners quickly conducted a market assessment and a spectrum valuation, before proceeding to define the auction design. One of the most critical aspects of the project was the need to ensure the entire auction process was transparent, auditable and beyond criticism. Satisfying the differing objectives of each set of stakeholders would be crucial to the successful outcome of the auction.

Colin Brooks, Partner at Value Partners, explained: “We were acutely aware of the varying stakeholder requirements and as a consultancy it was our job to collaborate fully with each group. In the case of securing income for the treasury, while meeting the needs of the operators, we advised the Government to set a reasonable rate for the spectrum to attract bidders and ensure that operators wouldn’t over pay for licences and would therefore be able to afford network upgrades. High prices have a knock-on effect on broader market development; something the Government wanted to avoid.

“Pakistan was in a good position to learn from the experience of neighbouring India, which despite generating a great deal from its auction had failed to hit the anticipated levels of adoption of next-generation mobile services. Pakistan was able to benefit from our experience of advising bidders in auctions in the emerging markets, which include Bangladesh and Thailand, and the fact-based consultancy we could provide. Our team comprised of spectrum experts from ten different countries,” said Brooks.

The consultancy was also faced with a short and challenging project timetable of just four months. The Government had originally scheduled February 2014 as the deadline for the auction but discussions with Value Partners convinced them to push the auction deadline to April. Despite this, the auction had to be delivered in a very short space of time, and, with the media and civil society scrutinising every step of the process the Government and the Pakistan Telecommunication Authority (PTA) had to ensure that a competitive auction would meet expectations and provide the foundations for a sustainable mobile services market. 

Brooks said: “The Government and PTA were very responsive to our suggestions and we knew if Pakistan was going to catch-up with other markets then besides 3G they should also release some 4G spectrum to further enhance broadband connectivity in the country. The allocation of 4G provided the operators with a different set of options, stimulating greater interest. It also removed the need for a separate 4G auction in the next couple of years. Consequently the entire allocation of 3G spectrum was sold with only one block of 4G spectrum remaining. We had planned for this possibility and factored it in to the potential revenue estimates.”

The auction went on to secure revenues of over $1.1bn, which, for the spectrum sold, met with the forecast and leaves the Government with an additional option to sell the remaining spectrum in the very near future.  Taking into account recent international benchmarking and market conditions this was a very satisfactory result for all parties.

Etienne Piciocchi, engagement manager at Value Partners, explained: “Through our close collaboration with the PTA it was possible to design and deliver an auction process that was transparent, secure and aligned to the needs of the Pakistani market. This was done using the widely accepted structure known as Simultaneous Multi Round Auction, and an Electronic Auction System, which allows mobile operators to remotely submit their bids. The results of the auction were presented live at a press conference attended by the operators and presided over by the PTA chairman.”

The auction was a huge success and the results will impact across the whole of Pakistani society. Wireless connectivity and broadband access will have a positive effect on business, education and industries such as agriculture. It will pave the way for mobile payments, m-health and other developments powered by mobile technology and applications. The provision of next-generation mobile services contributes directly to GDP growth, job creation and tax revenues.

PTA Chairman Dr Syed Ismail Shah said: “We are delighted with the outcome of the auction and we thank Value Partners for their professional and flexible advice, guidance and support throughout the process.”

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