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For the telecoms, a dangerous delaying game begins

Everyone understood that renewing a license to be a mobile phone technician in Pakistan was not going to be a straightforward activity, but no one observed that it would be as chaotic as it has ended up to be.

On May 24, the licenses of 2 of the country’s biggest mobile phone managers — Jazz and Telenor — are set to expire after they hit their 15-year life, and the strategy of regeneration has dragged so long and so tough that each organization have had to strategy the courts with a plea that the “government should be stopped from using some adverse steps that restrict the ability of the managers to carry on their business”, based on a petition filed in the Islamabad High Court final Friday.

The courtroom is right now planned to listen to arguments from each side on May 14. Each organization are requesting the govt to renew the licence at the equal dollar cost at which the licence was acquired back in 2004 when the auction was originally held. The cost at that time was $291 million. The govt, spurred by the courtroom steps, entertained the request to proceed with the regeneration request in the cabinet conference held on Tuesday and decided that in the light of the spectrum auctions held in recent years, the licence should be renewed at $450m instead.

each organizations are now group to contest that figure with the argument that the telecom policy, as well as the relevant clauses in the licence itself , need that the 1st renewal take place at the similar cost that the licence was originally acquired at. The recourse to the courts became necessary when each organizations found that the govt was not moving on their original request for renewal that was uploaded a lot more than 2 yrs back, according to senior officers familiar with the issue in each organizations. These officers spoke with Dawn on condition that their names not be used because of the sensitivity of the issue.

“When our ask for renewal was originally sent,” one of these officers said to Dawn, “the govt was distracted by problems of its own.” Ever since there have been so many changes of people at the top that they found it tough to get the attention of anyone who could take the process forward for them. “By the time the new govt came into energy, much time had already been lost and we still had no clear indication of how the renewal method would proceed.”

Then financial minister Asad Umar took up the procedure and began to coordinate its implementation, which necessary the participation of the IT ministry and the Pakistan Telecommunications Authority ( PTA ), the sector regulator that has to issue an executive order once the cost and the process have been decided. But once he was removed from his position, both organizations were back to square one again.

With only weeks to go before the expiration of the licence, each corporations found themselves in a position where they could face an expiration of their license without any regeneration, meaning the continuity of their enterprise would be in jeopardy, which in turn would necessitate instructions to their parent organizations that might be forced to problem notices to their shareholders in international stock markets that their Pakistan operations faced a danger to business continuity. Such a notice would have severe adverse consequences for the share cost of the parent businesses, thereby sending a message to global markets that Pakistan is a dangerous place to invest in since the govt has a difficult time discharging its obligations towards investors.

The involvement of the courtroom has spurred the govt to act. In the meantime, the courtroom has granted a stay to the govt to not take any steps, so officers of both companies are confident that if the govt tries to problem the implementation order of the cabinet decision, and media its claim for $450m for license regeneration, they will have a good case to argue that the steps constitute contempt of courtroom. And when the govt presents its case before the court on May 14 to say that they have now started to move on the renewal process, the companies feel they will be able to argue that the demand for $450m is contrary to the law, and continue their case before the courtroom.

“All policies point to $290m like the cost of renewal,” says one of the officers involved in the problem. “The govt is sticking to $450m out of fear of NAB only.” For now, if the stay order remains in place, each company will be permitted to continue operations beyond the expiration of the license while they negotiate the cost with the govt. The danger they now face, according to the company officers, as if the courtroom vacates the stay and leaves each party to their devices to settle the issue between them. Given the short timeline, the companies would then be at a dangerous drawback. The other scenario is more optimistic, the officers say, where the courtroom entertains the companies plea that the govt “is not interpreting its own policies in a lawful manner”.

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