Validity of Revised Radio Frequency Spectrum Fees

TELECOMREGULATORY

Assad Ullah Jaral

9/25/20244 min read

a tall pole with a flag on top of it
a tall pole with a flag on top of it

In Constitution Petition No. D-2119 of 2024, the Sindh High Court addressed a petition filed by DVCom Data (Private) Limited ("DVCom Data") challenging the revised demand for the annual Radio Frequency Spectrum Fees by the Pakistan Telecommunication Authority (PTA). The petitioner contended that PTA’s demand for payment in U.S. Dollars or its equivalent in Pakistani Rupees, based on current exchange rates, constituted an unlawful modification of the license terms. The Court dismissed the petition, upholding PTA's authority to demand payment in U.S. Dollars or its equivalent at the prevailing rate, finding no merit in the petitioner's claims of waiver, promissory estoppel, or unilateral modification of the license.

Background:

The petitioner, DVCom Data, held nine Regional Wireless Local Loop (WLL) licenses issued by the Pakistan Telecommunication Authority (PTA) under the Pakistan Telecommunication (Re-organization) Act, 1996, and the Telecommunication Rules, 2000. These licenses included an annual fee obligation, denominated as either U.S. Dollars or an equivalent amount in Pakistani Rupees. For over 18 years, PTA had accepted payments in Pakistani Rupees based on the exchange rate at the time of license issuance. However, beginning in 2022, PTA issued demand notices seeking payment in U.S. Dollars or its equivalent in Pakistani Rupees based on current exchange rates, which had significantly increased since the time of issuance. The petitioner challenged these demand notices, arguing that PTA was attempting to unilaterally revise the license terms without consent.

Key Issues:

Legality of PTA’s Demand for Payment in U.S. Dollars or Its Equivalent in Pakistani Rupees: Whether PTA had the legal authority to demand payment in U.S. Dollars or its equivalent in Pakistani Rupees at the current exchange rate, as opposed to the rate prevailing at the time of license issuance.

Unilateral Modification of License Terms: Whether PTA's demand for payment based on the current exchange rate constituted an unlawful modification of the license terms.

Promissory Estoppel and Waiver: Whether PTA was estopped from demanding payment based on current exchange rates due to its historical acceptance of payments in Pakistani Rupees at the exchange rate prevailing at the time of license issuance.

Court's Analysis:

Legality of PTA’s Demand: The Court carefully examined the terms of the license agreements and found that the annual Radio Frequency Spectrum Fee was expressed in U.S. Dollars or its equivalent in Pakistani Rupees. While the petitioner argued that payments had historically been made in Pakistani Rupees, the Court noted that the inclusion of U.S. Dollar amounts in the agreements indicated the parties' intention that payment could be made in either currency, but at equivalent values. The Court emphasized that the fluctuation of exchange rates over time did not alter the core obligation under the license to pay an equivalent amount, ensuring parity between the two currencies at the time of payment. Therefore, PTA’s demand for payment based on current exchange rates was consistent with the license terms and did not constitute a modification.

Unilateral Modification of License Terms: The petitioner argued that PTA’s demand for payment in U.S. Dollars or its equivalent at current rates constituted a unilateral modification of the license. The Court rejected this argument, finding that the demand was fully in line with the express terms of the license agreements. The agreements provided for payments in U.S. Dollars or the equivalent in Pakistani Rupees, and the fluctuation in exchange rates over time did not amount to a change in the fundamental terms of the contract. The Court held that the intention of the parties, as reflected in the agreement, was for payments to reflect the current value of the U.S. Dollar, thereby maintaining the integrity of the financial obligations under the licenses.

Promissory Estoppel and Waiver: The petitioner further contended that PTA was estopped from demanding payment based on current exchange rates due to its historical acceptance of payments in Pakistani Rupees at the lower exchange rate from the time of issuance. The Court disagreed, stating that the principle of waiver requires clear evidence of an intentional relinquishment of a known right, which was not demonstrated in this case. PTA's past acceptance of payments in Pakistani Rupees did not constitute a permanent waiver of its right to demand payment based on current exchange rates. The Court further held that promissory estoppel did not apply, as the petitioner could not reasonably expect that the exchange rate applied at the time of issuance would remain static for the entire duration of the license.

Court's Conclusion: The Court concluded that PTA’s demand for payment in U.S. Dollars or its equivalent in Pakistani Rupees at current exchange rates was consistent with the terms of the license agreements and did not constitute a unilateral modification. The Court rejected the petitioner’s claims of promissory estoppel and waiver, noting that PTA’s past conduct did not preclude it from enforcing its rights under the licenses. Consequently, the petition was dismissed.

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