As Pakistan gears up for its 2025 spectrum auction, industry experts are expressing concerns that elevated reserve prices could impede the nation’s digital progress. The Global System for Mobile Communications Association (GSMA) has highlighted that maintaining high spectrum costs may lead to significant economic setbacks for the country.
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Historical Context: Pakistan’s previous spectrum auctions have faced challenges, with high reserve prices resulting in unsold spectrum portions. This has directly affected the rollout and adoption rates of 4G services, leading to substantial economic losses. Estimates suggest that delays in spectrum allocation have cost the telecommunications sector billions in potential GDP contributions.
Current Spectrum Allocation: Compared to other Asia-Pacific countries, Pakistan’s mobile operators have access to significantly less spectrum, creating bottlenecks that affect service quality and coverage. This limitation is particularly concerning as the demand for mobile data continues to grow.
Economic Challenges: The broader economic environment in Pakistan exacerbates these issues. Soaring inflation rates, currency depreciation, and escalating energy costs have already placed significant pressure on telecom operators’ margins. Adding expensive spectrum costs to this mix raises concerns about the sustainability of current pricing models.
Financial Implications: Industry data indicates that spectrum costs, as a proportion of operator revenue, have reached concerning levels, far exceeding global benchmarks for sustainable investment. This trend is worsened by pricing spectrum in US dollars, exposing operators to additional currency risks in an already volatile economic environment.
Looking Ahead: As Pakistan prepares for the 2025 spectrum auction, the decisions made today will have far-reaching implications for the country’s digital future. Evidence suggests that maintaining high reserve prices could significantly impede the mobile industry’s growth potential and, by extension, the country’s digital transformation.
