ISLAMABAD: The GSMA has raised concerns over Pakistan’s spectrum policies, warning that the country has one of the lowest allocated mobile spectrums in the Asia-Pacific region. The organization emphasized that rising spectrum costs are unsustainable and pose a serious threat to the future development of mobile services in Pakistan.
Pakistan’s Digital Growth at Risk
Mobile network infrastructure is the backbone of Pakistan’s digital transformation, supporting economic growth and connectivity under the Digital Pakistan initiative launched in 2018. While the country has made significant progress—expanding mobile broadband coverage to 83% of the adult population compared to just 15% in 2010—Pakistan’s telecom sector now faces critical challenges.
High inflation, currency depreciation, and soaring energy costs have strained telecom operators, making it harder to invest in network expansion. Adding to this, Pakistan has one of the lowest assigned mobile spectrums in the Asia-Pacific region, with just 270 MHz compared to the regional average of over 700 MHz.
Progress on Spectrum Availability
Despite these setbacks, the government and Pakistan Telecommunication Authority (PTA) have made progress in streamlining spectrum allocation. In a significant development, nearly 600 MHz of spectrum in key frequency bands (700 MHz, 1800 MHz, 2.1 GHz, 2.3 GHz, 2.6 GHz, and 3.5 GHz) will be auctioned in early 2025. This move is expected to address spectrum shortages and accelerate the growth of Pakistan’s digital economy.
The Challenge of Rising Spectrum Costs
GSMA highlighted that spectrum costs in Pakistan have risen dramatically over the past decade. Spectrum charges as a percentage of recurring revenue have jumped from 11% in 2014 to 20% in 2022, largely due to the Pakistani Rupee’s depreciation against the US dollar. Unlike most countries where spectrum fees are paid in local currency, Pakistan’s spectrum charges are denominated in USD, exposing operators to exchange rate volatility.
At the same time, operator revenue per MHz is declining while demand for bandwidth is increasing, making the current pricing model unsustainable. GSMA warned that if the trend continues, it could hinder future investments in mobile networks.
Flawed Auction Strategies Leading to Unsold Spectrum
Pakistan’s past spectrum auctions have often resulted in unsold spectrum due to high reserve prices. In 2014 and 2021, unsold spectrum in key bands (850 MHz, 1800 MHz, and 2.1 GHz) slowed down the expansion of 4G services and negatively impacted digital growth. GSMA estimates that if these auctions had assigned all available spectrum, Pakistan could have gained an additional $300 million (PKR 80 billion) in economic benefits.
Looking ahead, Pakistan’s 2025 spectrum auction must focus on digital infrastructure development rather than revenue generation. A two-year delay in assigning spectrum could result in a GDP loss of $1.8 billion (PKR 500 billion) between 2025-2030, while a five-year delay could lead to a $4.3 billion (PKR 1,168 billion) economic setback.
GSMA’s Key Recommendations for a Sustainable Spectrum Policy
To ensure fair pricing and sustainable growth, GSMA has put forward the following recommendations for policymakers:
- Set Reserve Prices Conservatively – Lower reserve prices in upcoming auctions to prevent unsold spectrum and allow the market to determine fair value.
- Denominate Spectrum Fees in PKR – Shift spectrum payments from USD to local currency to protect operators from exchange rate volatility.
- Flexible Payment Plans – Introduce installment-based payment options for spectrum licenses to ease financial pressure on telecom companies.
- Adjust License Obligations – Ensure spectrum fees reflect the cost of meeting regulatory obligations to prevent undue financial burden.
- Commit to a Long-Term Spectrum Roadmap – A clear roadmap will reduce uncertainty and help operators plan for future network investments.
The Road Ahead
With the upcoming 600 MHz spectrum auction in 2025, Pakistan has a critical opportunity to reshape its telecom landscape. However, if spectrum pricing remains excessively high, it could stall 5G development and slow down Pakistan’s digital transformation. GSMA’s recommendations urge the government to adopt a balanced, market-driven approach to spectrum pricing, ensuring that Pakistan remains competitive in the global digital economy.
