ISLAMABAD: Pakistan is expected to attract direct investment of at least $150 million after the Nov 23 bidding for three direct-to-home (DTH) broadcast licences.

A top official of the Pakistan Electronic Media Regulatory Authority (Pemra) told journalists that 12 companies, including three foreign operators as part of local consortiums, had been shortlisted to bid for three DTH licences. The licences would be valid for 15 years.

Terming DTH a game-changer for the electronic media industry in Pakistan, the official said it would offer quality services and a wider range of choice to consumers and a lucrative revenue source to the economy’s managers. It would also end the monopoly of a few analogue cable operators.

It would not end the cable operators’ business, he said, but would compel them to invest in technology and their distribution systems.

Pakistan has close to 25 million electronic media subscribers and between three and five million consumers use Indian DTH illegally. Once the licensing process goes through, subscribers of Indian DTH would have to shift to the local network.

Foreign channels will get landing rights to come under the local regime through a regulatory process and launching of new local satellite channels will be allowed.

The official said that the current analogue distribution system offered a maximum of 80 channels while the DTH would increase the capacity to 250. Each local DTH licence holder is expected to have at least 500,000 subscribers.

A Chinese company is currently in the process of completing formalities to set up a factory for set-top boxes (STBs) for transmitting broadcasts to homes. The initial cost of an STB to consumer would be around Rs3,500 which could be recovered by DTH operators in instalments. Monthly subscription would be around Rs550.

“This will be the biggest investment in Pakistan’s electronic media history,” the official said. The conservative investment estimate of $150m was based on feasibility studies of shortlisted firms. It could go up to $250m after the three licence holders expand operations in the next two years. These estimates do not include bidding proceeds that would start with a base price of Rs200m for each licence.

The licence holders would employ 1,500 people directly and the move would open up indirect job opportunities for 15,000 people in the next two to three years as DTH penetration increases, he said.

Of the firms shortlisted, Startimes Communications Ltd would have 49 per cent shareholding from a Chinese operator, Parus Media and Broadcast Ltd will have 49 per cent stake from a Russian operator and Smart Sky Ltd (partially owned by PTCL’s foreign shareholders) would have a foreign shareholding. The official said that the law did not allow majority shareholdings to foreign firms, so 51 per cent stakes would have to be controlled by local partners.

Other shortlisted firms include Orient Electronics of Lahore, Mag Entertainment of Lahore, IQ Communication of Karachi and six firms, Skyflix, Sardar Builders, Nayatel, Mastro Media Distribution, Shahzad Sky Ltd and HB DTH, from Islamabad.

Under obligations of the International Telecommunication Union (ITU) Treaty, Pakistan was required to digitise its broadcast operations but the process had been delayed, the official said.

Once the bidding went through, DTH licence holders would have to start operating within the year or risk termination of licences. The bidders would deposit 15 per cent of the bid money at the outset of the bidding as earnest money, followed by 50 per cent of the bid money upfront. The remaining amount could be paid immediately or in three yearly instalments at a mark up rate (the Karachi Interbank Offered Rate).

Each DTH licence holder would have to pay an annual fee of Rs10m and contribute two per cent of their gross revenue after the first three years of operations.

The official said the three operators would have an estimated revenue of more than Rs24 billion. The bidders would not be allowed to change their directors for at least two years.

He said local broadcasters were not allowed to have distribution businesses under the law and none of the shortlisted bidders had any direct connection with broadcasters to the best of Pemra’s knowledge.

Published in Dawn, November 18th, 2016