Space Telecom keeps regulator waiting

27 Apr 2004

Space Telecom (Spacetel), one of the recent winners in last month’s auction of two new cellular GSM licences in Pakistan, has failed to meet the 26 April 2004 deadline to pay the required 25% of the USD291 million licence fee to the Pakistan Telecommunications Authority (PTA), citing ‘internal strife’ as the reason. According to local press sources, a rift within the Spacetel Consortium, which comprises Mr Abid Ali Butt’s Space Telecom, Syria Telecom and Pakistan Oil Fields, emerged recently and subsequently forced Syria Telecom and Pakistan Oil Fields to initiate legal proceedings against Space Telecom in order to obtain an injunction entitling the two partners to deposit the required 25% down-payment into an escrow account and fulfil the requirements of the licence award. Failure to make the payment allows the PTA to forfeit Spacetel’s earnest money of USD10 million and cancel its licence, however, no such measures have been taken and Abid Ali Butt is confident the matter can be resolved amicably.

On 15 April the PTA awarded 15-year GSM concessions to two new operators, Telenor and Space Telecom, each of which bid USD291 million to beat off competition from seven rivals. Norwegian incumbent Telenor and Space Telecom are each required to each pay half the licence fee within the first year, with the balance payable over the following ten. In addition, each will pay 2.5% of their annual gross revenues to the PTA. The bids greatly surpassed analyst expectations of USD100 million, a strong indication that the government’s drive to attract substantial foreign investment to the country’s underdeveloped telecoms market is bearing fruit.