850 Spectrum Auction: Telenor Versus Surprise?

It is an important day for the Pakistan mobile industry as a very pertinent outcome will be declared by 4 pm. Today is the last day to apply for the 850 MHz spectrum auction.  Who is going to participate in the 850 MHz auction that is going to take place in mid of June? The answer to this fundamental question is quite predictable this time as compared with the auction of 2014. Although our colleagues in the media may take it negatively but predictability is an important factor for every business specially if one has to make substantial investment, they always try to reduce the risk of loosing their investment and provides path for profitability. So who is the likely winner one would like to bet on for the 850 MHz auction?

850 Spectrum Auction: Telenor Versus Surprise?

It should come very natural to all who understand the industry that who would be the natural winner or interested party that is likely to not only to participate but come out as a winner? There are many logical and obvious answers to this question. Let’s evaluate each operator’s case here:

Mobilink after its successful merger with Warid Telecom, only a few days back, is undergoing through transformational phase primarily for reason that it had Spectrum and Subscribers which will enable Mobilink to use the much needed 4G play. Also together Mobilink-Warid will have now more cellular subscribers. This merger has enabled Mobilink to avoid having to pay an auction fee of USD 395 Million (base price).

Zong is also not likely to apply for the auction as it has already enough spectrum assets that can help the company for the foreseeable future at least a couple of years to increase its subscriber base and ultimately its network.  They are more likely to go for some acquisition (which could possibly be a struggling operator) for getting market share.

Ufone, which in the last auction has also showed interest in the 4G spectrum but they were technically not qualified. While, they could be an interested party but the companies recent re-organisation and its intent to merge operations with the parent PTCL group may not make it a hot contender. They also recently reformed its spectrum using 900 Mhz band for easing up its QoS issues at least for the short time. Ufone is also a bit cash strapped which could be a deciding factor for them to not go for a head on auction.

Also read our exclusive article on mergers & acquisitions: Pakistan Telecom: Acquisition, Merger & Divorce

My bet of course will be on Telenor Pakistan as they are the only mobile service provider that is in need of more spectrum in order to improve its network from all aspects. As far as the subscriber base of MBB is concerned, Telenor has around 8 million subscribers whereas Mobilink has 8.7 million, Zong has around 6 million and Ufone being the forth on this list has 5 million MBB subscribers. This makes Telenor having the requirement and appetite for getting more chunk of spectrum as it will enable Telenor to increase its data subscribers while improving its overall ranking as well.

These are my assumptions but if something happened other than this, not only me rather it will also surprise the entire industry. Let’s keep waiting while our fingers cross and we shall all find out very soon-if it is to be a smooth sailing or a surprise.