Telecom Sector trembled in July 2008 Due to Increased Taxes

Telecom sector of Pakistan is facing some tough time in ongoing months, specifically due to significant increment in taxes on cellular services and mobile phones. Along with a factor that came into consideration was severe attitude by PTA towards cellular companies that restrained them to sale illegal SIMs.

In June 2008, cellular companies not only saw a decline in sales but also 9 percent reduction in usage of mobile phones.

“We have witnessed decreased usage of mobile phone in terms of decreased minutes and mobile subscribers. It can easily be estimated that there is reduction in usage by 8 to 9 per cent after announcement of unfair taxation,” cellular companies’ officials told ‘The News’

Mehtab Haider of ‘The News’, in his recent report unveiled very interesting points regarding the state of telecom industry of Pakistan, which in fact shocked me. He notes that instead of freeing taxes on telecom services to further boost the sector the government has implied more taxes to cap one of most fruity sector of Pakistan.

Mehtab Haider, quoting a senior official from Ufone says that out of five cellular companies operating in Pakistan, only two are making profits, otherwise other three cellular companies are still struggling with loss. This is something that I was unable to comprehend, but as the report continued, it said that 150 percent of revenues are invested back by telecom companies, to meet expansion demands and increasing operating expanses.

Report says that this scenario is leading us towards the closures or mergers of cellular companies in coming couple of years.

On other hands, sales of cellular companies are going down to hit only 1.3 million mobile connections (for all cellular companies) in June 2008.

Tech reporter with over 10 years of experience, founder of ProPakistani.PK