SCO Gets AGP’s Nod on Starting Cellular Operations in Pakistan

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The Attorney General of Pakistan has put conditional weight behind the Military-run Special Communication Organization (SCO), supporting it to get a license to operate on commercial basis, saying there is no impediment in the grant of license provided it is confined to the business being carried out by the SCO.

Sub-Committee of Committee on delegated legislation, in its meeting, was briefed by the Attorney General of Pakistan and Ministry of Law and Justice on the issue of enhancement of SCO’s area of operation. The sub Committee was presided by convener of the committee Senator Muhammad Daud Khan Achakzai.

The Ministry of Law and Justice is already backing SCO, opining that Competition Act 2010 and the Telecom Re-organization Act 1996 does not bar it from operating on commercial basis throughout the country.


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However, the Ministry of Information Technology and Telecommunication has disputed the Law Division’s opinion while saying that it would be a violation of shareholder agreement with Etisalat and the government of Pakistan can face serious consequences in terms of financial as well as sever repercussions for the overall telecom sector.

The matter was referred to the AGP, seeking his view. Among others suggestions, the AGP said there is no impediment in the way of processing an application pending with the Pakistan telecommunication authority for grant of a license which would further the cause of national security provided it is confined to the business being carried out by the SCO. AGP further added that Etisalat has also failed in fulfilling its commitment of paying the outstanding amount. He said that, “I am confident that we can defend, our case in the international arbitration, if Etisalat takes it to the court.”

In his written response the AGP stated;

It appears that the matter in issue essentially is that of a difference of opinion between the two departments in the same division. On one hand is the administrative office of the Minister and on the other, the Special Communication Organization.

It appears that to date an application for issuance of license is pending with the Pakistan Telecommunication Authority apparently for the reason that administrative branch of the Ministry of Information Technology is of the view that such an application would be a breach of covenants made between Government of Pakistan and Etisalat vide a Shareholder agreement dated 12.4.2006. Particular reference is made by Ministry of Information Technology to clause 10.2.

The representatives of the SCO have categorically stated that they have no intentions of competing with Etisalat or any other telecom operator and that they intend to secure license strictly within the mandate of their organization and existing businesses. Their area of operation would not even coincide with that of Etisalat or any other telecom operator and that they were so desirous for strategic and reasons of national security.

Ministry of Information Technology considers it to be bound by the SHA and the stated policy of the Government of Pakistan. They made special reference to 15.2.1 of Telecommunication Policy 2015 which recognizes the area of operation of SCO to be Azad Jammu and Kashmir and Gilgit-Baltistan. It is their belief that the SCO cannot develop, maintain and operate telecommunication systems and infrastructure and services outside Azad Jammu and Kashmir and Gilgit-Baltistan. In my view aforesaid clause gives exclusive rights to SCO and does not restrict its area of operation.

The Law Division while opining on the matter in issue is of the considered view that the SHA was in contravention of the laws of Pakistan specially Section 3 of the Competition Act, 2010. The Competition Commission of Pakistan is also of the view that Clause 10.2 of SHA, which is the non-compete covenant, is void in terms of sub-section (3) of Section 4 of the Competition Act, 2010. The opinion rendered by Competition Commission of Pakistan is non binding and does not constitute as a ruling.

In my considered opinion as long as SCO remain within the confines of its mandate and establishes a regime which caters for strategic and security concerns of Pakistan, it will not fall foul of the covenant made between Etisalat and the Government of Pakistan. I tend to agree that the restrictive covenants may not stand in the way of grant of license but in order to avoid any litigious challenges, it will be better and a safer course for SCO to incorporate a separate legal entity for the purposes of carrying out its operations. Since the representatives of SCO have categorically stated that they have no intentions of completing with Etisalat it would be prudent if such an undertaking is placed on record for processing the request for grant of license.

To conclude, in my considered opinion subject to meeting the criteria there is no impediment in the way of processing an application pending with the Pakistan Telecommunication Authority for grant of a license which would further the cause of national security provided it is confined to the business being carried out by the SCO.

However, the ministry of IT desired that the matter is highly important and therefore it required more time for deliberations. DG SCO and other Officials of the SCO said that SCO will stick to the mandate.

The meeting was attended by Senators and senior officers of the ministry of Law and Justice, SCO, IT and other attached departments.

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