Zong Sends USD 40 Million Legal Notice to PTA, Demands a Refund for Defective Spectrum

Zong Sends USD 40 Million Legal Notice to PTA, Demands a Refund for Defective Spectrum


CMPak, that operates in Pakistan with the brand name of Zong, has sent a legal notice to Pakistan Telecommunication Authority for auctioning spectrum that is noisy and corrupted due to in-band interference caused by widespread usage of DECT 6.0 devices.

Zong, in a notice sent through its counsel, said that PTA, in collaboration with Frequency Allocation Board (FAB) put the defective band up for auction despite the fact that interference in the band was there since before the auction and is still in place despite PTA’s various damage control actions.

It maybe recalled here that Zong had participated in the spectrum auction in 2014 and was awarded frequency spectrum band of 1920-1930 and 2110-2120MHz for 3G network and services. Moreover, DECT 6.0 devices — that are imported from abroad — operate in the same 1920-1930MHz — create interference in Zong’s spectrum.

Notice said that PTA and FAB didn’t remove such interference from the band and sold a spectrum that wasn’t suitable for purpose of offering next-gen services.

Legal Notice, a copy of which is exclusively available with ProPakistani, said that sale of this defective band breach the warranties that came with spectrum purchase.

Zong demanded to be allocated a 5MHz substitute spectrum with refund of 5MHz spectrum and USD 40 million agasint damages

According to Zong’s Counsel, the situation has resulted into sub-standard next-gen services from the company with huge capacity losses and consequent investments, business and reputational damage to the company.

Legal Notice said that matter had been raised with concerned authorities, i.e. with PTA and FAB, during mid-2014. However, the issue hasn’t been addressed at fullest so far. Zong’s Notice accepted that PTA carried noticeable damage-control actions, however, scale of problem is still limitless given the undocumented number of DECT 6.0 cordless phones.

Notice said that with ongoing CAPEX and OPEX, Zong can not wait indefinitely for the spectrum to get cleared, while it paid full spectrum fee in a single go in advance.

Notice said that FAB’s proposal of substitute band allocation for Zong will incur significant additional cost associated with network modification and deployment on the new tentative band.

Legal Notice requested PTA to respond to legal notice with-in 15 days with following demands:

  • Zong should be allocated 5MHz of a substitute band in 1950-1955MHz and 2140-2145MHz band and remaining price of 5MHz that Zong has already paid — along with KIBOR plus 3 percent — should be refunded.
  • If money isn’t refunded then an equivalent amount of money must be rebated against various fee and dues that Zong will have to pay to PTA in future.
  • Zong be given a compensation of US 40 million dollars for
    • Loss of revenues during last 12 months
    • loss of market share
    • incremental costs incurred during this time in network optimization, cost of additional resources deployed to identify, evaluate and combat interference.

Notice said that PTA should settle these claims with-in 15 days, failing to which may result into further action for the redress.

Copy of the legal notice was also shared with Prime Minister Office, FAB, Chinese Embassy, MoIT, Cabinet Division and Finance Division.