ISLAMABAD: Pakistan's top telecommunication authority has decided to take legal action against foreign news agency Reuters for trying to "sabotage" the much-awaited auction of next-generation cellphone spectrum licences.

Pakistan is set to hold auctions for 3G and 4G network licences on April 23, a step that the finance minister says will raise at least $1.3 billion.

The bid submission process for the auction was carried out last week to which response received from four existing cellular mobile operators of Pakistan was “very encouraging and satisfactory for the PTA,” according to the Pakistan Telecommunication Authority.

However, news agency Reuters claimed there was scant interest in the auction, and that Pakistan would not be able to raise no more than $850 million.

Also read: 3G and 4G auction to yield $1.3bn, says finance minister

The Reuters report had quoted unnamed officials as saying that the bids were “so embarrassingly off target” that Finance Minister Ishaq Dar wanted to call off the auction.

“This was a completely baseless and fabricated story, and came out at when we were ready to go into the auction in an effort to damage the process,” PTA spokesman Khurram Mehran told Dawn.com.

Mehran said the telecom authority had forwarded the matter to its legal counsel, which advised them to initiate legal proceedings against the news agency.

“We have prepared our legal notice and it will be served to Reuters as soon as we complete the auction process on Wednesday,” he said.

Reuters was unavailable for comment.

Auction to take place on Wednesday

Finance Minister Ishaq Dar says the auction of next generation 3G and 4G licences is expected to create employment opportunities for about 100,000 people.

In the budget for financial year 2013-14, Dar said the government had expected to raise $1.2bn from the auction. But on Wednesday, Dar said the base price of the five licences is expected to be over $1.3bn.

The base price for a 3G licence and 4G licence is set at $295 million and $210 million, respectively. Companies can bid for one 10MHz bandwidth or the entire spectrum consisting of three 10MHz bandwidths (a total of 30MHz).

According to PTA, China Mobile (Zong), Mobilink, Ufone and Telenor Pakistan submitted sealed bids by the stipulated deadline last week. Warid Telecom, the fifth major player in the local market, chose to stay away from the bidding process.

Related: Four bidders for 3G, 4G licences

Two foreign companies – Turkcell and Saudi Telecom – that initially appeared interested in obtaining the licences, also chose not to enter the bidding process.

The auction process is scheduled to take place on Wednesday at 11:00am.

Pakistan, a country of 180 million people and 132 million mobile phone users, is the only country in the region that still does not offer 3G services. Afghanistan switched to 3G in 2012.

The local telecommunications market was deregulated in 2004 and foreign firms have invested heavily in recent years.