In a scathing revelation that could shake the foundations of Pakistan’s telecom industry, the Auditor-General of Pakistan’s latest report has exposed China Mobile Pakistan Limited (CMPak), better known as Zong, for allegedly continuing to use unauthorized radio frequency spectrum long after its license expired. This blatant violation of regulatory norms has not only resulted in massive financial losses to the national exchequer—potentially running into billions of rupees—but also raises serious questions about national security, fair competition, and the integrity of foreign-owned operators in Pakistan’s critical telecom sector.
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The damning findings, detailed in the Audit Report on Public Sector Organizations (Telecommunication Sector) for Audit Year 2024-25, paint a picture of systemic negligence and possible collusion that allowed Zong to exploit Pakistan’s airwaves illegally for nearly a decade. Released by the Auditor-General’s office, the report—spanning 223 pages and based on audits of entities like the Pakistan Telecommunication Authority (PTA) and Frequency Allocation Board (FAB)—highlights Zong’s unauthorized use of “temporary additional compensatory frequency spectrum” allocated back in 2007. What started as a short-term fix for cross-border interference from Indian networks has morphed into a prolonged scam, auditors claim, depriving the government of rightful spectrum fees and distorting the market against competitors like Jazz, Telenor, and Ufone.
The Spectrum Scandal: From Temporary Aid to Permanent Abuse:
According to the report (pages 50-51), FAB initially granted Zong extra spectrum for its 2G (GSM) services during its 30th Board meeting on September 8, 2007. The allocation was meant to counter interference affecting Zong’s operations in Punjab and Sindh border areas—a legitimate concern at the time. However, this “temporary” arrangement was extended multiple times, with the final extension expiring on March 11, 2016.
Auditors observed that Zong brazenly continued using this “illegal temporary additional compensatory spectrum” well beyond the expiry date, in clear violation of its license terms. “M/s CM Pak (Zong) continued to use illegal temporary additional compensatory spectrum after expiry of its 2G (GSM) license,” the report states bluntly, emphasizing that this not only breaches regulatory requirements but also inflicts “significant financial loss” on the state. The audit contends that Zong’s actions have led to non-payment of spectrum fees, late payment surcharges, and potential penalties, contributing to the overall Rs 103.7 billion in recoveries pointed out across the telecom sector.
Experts estimate the financial hit from Zong’s unauthorized spectrum use could exceed Rs 10-20 billion over the years, factoring in annual radio frequency spectrum fees (ARFSF), renewal charges, and lost opportunities for re-auctioning the bandwidth to other operators. “This is daylight robbery of Pakistan’s scarce national resources,” said a senior telecom analyst, speaking on condition of anonymity. “Spectrum is like gold in the digital age—Zong has been mining it for free while the government and consumers pay the price through higher costs and poorer service quality.”
National Security Risks and Market Distortion:
The implications go far beyond finances. Spectrum management is crucial for national security, especially in border regions where interference could mask espionage or cyber threats. The report implicitly questions why FAB and PTA—regulators under the Cabinet Division—failed to enforce the expiry, allowing a foreign entity like Zong (wholly owned by China Mobile Communications Group) to retain control over sensitive frequencies. “In an era of escalating cyber warfare and data sovereignty concerns, handing over undeclared spectrum to a foreign operator is a red flag,” warned cybersecurity expert Dr. Ayesha Khan from the Institute of Strategic Studies Islamabad. “This could compromise border communications and expose Pakistan to undue foreign influence.”
On the competitive front, Zong’s illegal advantage has helped it capture a 25.7% market share as of September 2024, trailing only Jazz (37%) but ahead of Telenor (22.8%) and Ufone (13.5%). The audit report notes that such violations undermine fair play, potentially inflating Zong’s revenues while squeezing local players. Consumers, already grappling with overcharging scandals in the sector (as seen in similar cases with Jazz in Annexure-III), may have indirectly footed the bill through higher tariffs and subpar services in affected areas.
The report’s broader critique of PTA’s “poor regulatory oversight” amplifies the Zong fiasco. Auditors slam PTA for failing to review licensing frameworks as mandated by the 2015 Telecom Policy, leading to prolonged litigations and delayed recoveries from operators. In Zong’s case, this laxity has enabled what the report calls “illegal use” without immediate penalties or spectrum reclamation.
Zong’s Response and Calls for Accountability
Zong officials, when contacted for comment, dismissed the allegations as “misinterpretations” of historical allocations, claiming ongoing discussions with regulators for extensions. “We have always complied with PTA and FAB guidelines and contributed significantly to Pakistan’s digital economy,” a Zong spokesperson said in a statement. However, the company declined to provide specifics on spectrum usage post-2016 or any payments made.
Critics aren’t buying it. Opposition leaders from PTI and PPP have demanded an immediate inquiry, with PTI’s telecom spokesperson labeling it “a betrayal of public trust by a foreign giant.” The report recommends swift recovery of dues, imposition of liquidated damages, and legal action, including potential license suspension.
The Auditor-General’s office has urged the Public Accounts Committee (PAC) to pursue the matter, noting that similar irregularities in the telecom sector totaled Rs 157 billion in outstanding receivables and violations. With Pakistan’s telecom revenues hitting Rs 9,550 billion in FY 2023-24 amid economic woes, Zong’s alleged free ride could erode investor confidence and stall the sector’s growth.
As broadband penetration hovers at 58% and mobile coverage at 91%, this scandal underscores the urgent need for stricter enforcement. If unaddressed, it risks turning Pakistan’s telecom boom into a bust, with Zong at the epicenter of the fallout. The nation watches as regulators decide: Will Zong face the music, or will this spectrum heist become another forgotten chapter in Pakistan’s regulatory failures?