USF has so far auctioned 15 Lots and contracted 10 with different major telecom operators all over Pakistan covering 6,119 Mauzas out of approximately 12,000 un-served Mauzas in the country (services have already started in 2,100 Mauzas). Due to sparsely distributed population and remoteness of these Lots, the operators are facing the problem that revenues are far lower than normal whereas Operational Expenses (Opex) are much higher. The USF model of subsidizing Capex was supposed to take care of the issue which it did as long as the un-served Mauzas were not too remote and not too sparsely populated. But now as we move further away deeper in Baluchistan, the operators are increasingly staying away from bidding.
After meetings and correspondences with the Operators, it is felt that the Capex subsidy alone is not considered sufficient for the sustainability of operations in remote sparsely populated USF areas. Operators have learnt through experience that even if the subsidy amounts cater for 100% Capex, commercial & technical operations remain unsustainable with the much below-average revenue receipts from the very few subscribers in these sparsely populated areas. Therefore USF has decided to address this issue before further auctions.
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