The cellular mobile license bidding in Pakistan

So the bidding is finnally over and the licensees have been announced by the pta [Pakistan Telecommunication Authority] And the winners are.. 1 Space Telecom, Pakistan US $ 291 Million 2 Telenor Mobile Communications, Norway US $ 291 Million So a cool 582 million dollars then, that?s not too bad i guess, the pta must be happy with itself. But before we get carried away, the contract asks for only half of the amount upfront, with the rest being paid over the space of ten years. Nevertheless, i guess this should be a satisfactory outcome for the government. Its ironic that the fact that we have been able to achieve the above mentioned figures is based primarily of the effects of the apathy shown by the government over the years towards investment in telecom. infrastructure. This left us in the unenviable position of having one of the lowest teledensities in the world. This in tern, has made us a much bigger a prize than would otherwise have been the case. Which brings me to the these two bidders-the rather weird sounding 'space telecom' and Telenor, the incumbent telecom operator in Norway. Space telecom- a name totally devoid of any imagination, and thats why it has me so worried. For a name without imagination signifies that the guy running the show might be rich, but isn?t to cutting edge on his entrepreneurial abilities, a snazzy name, afterall is the bulwark of an effective marketing campaign. He?s the kind off guy that they call, i believe, a 'whale' in vegas-speak. Now the trouble is that a 'whale' in this part of the world means: a) A drug runner b) A gold smuggler c) An ex. government functionary with a pension of $65 per month d) something along these lines Some research on 'space telecom' doesn?t make me laugh at my own conspiracy theories, on the contrary its only gotten me even more concerned/excited about the potential backers of this entity. First of all, this press release states it to be a pakistani company, while more detailed documentation (from the expression of interest forms etc.) list it to be registered in holland. Which can only really mean, that in there excitement the PTA functionaries put down Space group as a pakistani concern because they had been dealing with pakistani officials in there dealings with the company. Let me explain the significance of that. This means that if the company is run by pakistanis, but is registered in holland-then the foreign incorporation can only but be a 'flag of convenience'-not exactly something that exudes confidence. Bloomberg has only just released an article that serves to at least partly vindicate my intuition. For, as they noted although two shareholders (Attock oil and Syriatel) were named, other stakeholders were not. These a less drastic (albiet less exciting) possibility-that the shareholders are from across the border, ie. India-in which case they would, i guess only release this information if and when the our new found friendship hardens. Which is not that say that it IS-i am but only giving a few possibilities from my own experiences, and in no way am i trying to claim that this is the factual case. [so lay off you trigger happy no-win-no-fees litigation firms] This is no doubt an exciting time for the industry, Spacetel has already pledged to invest 500 million setting up the service, which they plan to start in a year. Telenor espects to begin operations in 9-12 months. Speaking of telenor, the president sounded by all accounts a bit shocked by the price they eventually had to pay. It's nice to see that somebody has looked carefully into the game theory developed for the spectrum auctions in Europe. No doubt, we can hope to expect some competition, especially with mobilink (currently the largest provider) on prices-but the issue of network selection is what will really be decisive in delineating the telecom infrastructure at least for the next decade an a half. Will they go for something like 3g? Especially since the more whizz-bang the network, the more expensive the phones. In the UK for example Hutchison whimpoa heavily subsidizes the phone available on its 3g network '3'. Would this be commercially viable in Pakistan? probably not With deregulation however, should one of the bidders decide to go for a local loop or domestic trunk calling, we could see a drastic fall in domestic calling charges. This would be especially true for telenor, with its extensive satellite network- whether 'space telecom' really has any assets in space, remains to be seen ;) However for those of us, calling in to pakistan-the situation does not seem all to bright. The federal government still wants to make a pretty penny from incoming call charges, like it has been in the past. With this in mind a number of 'development funds' have been setup where a percentage of the charges would have to be paid. Just before i end, i just read an interesting newsbyte on one of the pakistani newspapers. It's a quote from the telecoms minister-which raises more questions than it answers "These two companies include Telenor, a Norwegian mobile telecommunication company and the other one is Space Telecom, which is another European mobile telecommunication giant? He certainly likes the words "mobile telecommunication" but is space telecom really the giant he makes it out to be? how come Google hasn?t heard of them? Doubtless an exciting time for cellular phones in pakistan