Business

Telecoms help Gov't meet IMF target

Early renewal of mobile licences, huge price cut on 700 MHz spectrum raked in $7b under the fiscal wire

BY SHAMILLE SCOTT Business reporter scotts@jamaicaobserver.com

Friday, April 04, 2014    

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THE Government collected an unexpected $7 billion in additional revenue from Jamaica's two mobile operators, just before its first fiscal year under the latest IMF programme closed out.

In getting LIME and Digicel to renew their telecommunications licence a full year ahead of schedule and by selling a 700 megahertz (MHz) spectrum block to the latter at a much lower price than it previously advertised, the Government significantly increased its chance or meeting critical fiscal balance targets for the end of March.

Moreover, the Government has an additional $5.6 billion to collect over the next 10 years, starting with a $560- million payment this fiscal year, which began on April 1.

Digicel has committed $9.36 billion, of which it already paid $5.48 billion on March 31, while LIME has signed on to pay $3.29 billion for its licences, having already paid down $1.53 billion.

"A little cash in the kitty isn't such a bad idea," said Phillip Paulwell, minister of science, technology and mining.

The sums include US$25 million ($2.73 billion) that Digicel has agreed to pay for one of three available 700 MHz spectrum blocks, which failed to attract any bidders in an auction last October.

Plans to sell two 700 megahertz (MHz) band licences, which allow for the provision of faster wireless data services, fizzled last year as none of the 24 persons from 10 countries showing interest bid on them (priced at a minimum of US$40 million and US$45 million, respectively).

Paulwell admitted that the ministry and related stakeholders endured tough negotiations over the 700 MHz spectrum bands and felt they would have been unsuccessful.

"I think, in retrospect, it would have been difficult for us to have got the amount although we thought there was value in it," he said. "And even after we were seeking to negotiate, we were way below the $25 million I tell you, people were coming to us at $10 million. We are not going to give away the spectrum."

He urged other players to seek the licences for other available bands.

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