Caution: Cellular Companies May Increase Call Rates

Two major cellular companies have proposed Pakistan Telecommunication Authority to increase call rates, terming it an undesired but due action due to declining revenues of Telecom industry, reported The News.

A report filed by Jawwad Rizwi said that this proposal was put forward in a meeting held at PTA headquarters on January 14, 2009, headed by Chairman PTA and was attended by CEOs of all cellular companies. Member finance was also present to evaluate the situation of cellular industry.

Report says that Mobilink and Ufone opined to increased call rates, however, Zong and Warid Telecom voted against this. Telenor reportedly remained neutral.

It merits mentioning here that if one company will increase call rates, others will defiantly follow this. This is what we have seen for 5 percent service charges, charges for help line calls etc. So here comes the role of PTA, that it should bound companies to not to increase call charges, instead authority should push the government to lower taxes on cellular companies to relieve them.

Cellular operators’ representatives stated that their revenue had registered a declining trend. Representatives of the two operators, of which one has the country’s largest customer base and the other is a sister organisation of the national telecommunication company, had proposed to increase call rates in order to attract further investments and maintain the quality of their services.

They said the sector had received the highest Foreign Direct Investment (FDI) during the last couple of years and in the current scenario no further investments are expected.

Cellular operators said the revenue of the telecom industry dropped due to an increase in taxes. The Average Revenue Per User (ARPU) has been reduced to $2.7 per consumer, as compared to last year’s $4 per consumer in the same period. They proposed the burden should be shifted on to the consumers by increasing call rates.

Of the two operators’ representatives, one is based in China while the other is UAE-based. The UAE-based representative opposed the idea of increasing call rates, saying that it would reduce the consumer base. They also opposed the idea as the customers are already affected with the current high tax rates and imposition of new 5 per cent surcharge on every easy load has also put extra burden on the customers. They said the ARPU was declining due to many other reasons, not only due to taxes. On the other hand the Norway based cellular operator representative remained indifferent to this issue.

A spokesman of the sister organisation of National Telecommunication Company confirmed to The News that the meeting of all mobile company CEO’s, PTA Chairman, Member Finance PTA. However, he said that the meeting was not for increasing mobile tariffs, but rather to evaluate the financial situation of the cellular industry in the country. He said various suggestions were discussed for the betterment of the industry and consumers. This meeting was called in by the PTA.

Other issues which were also discussed in the meeting included UAN, SMS interconnection, infrastructure sharing. The meeting also discussed different competitive and aggressive call rates. It mentioned that the telecom industry was still in its growing phase, although the pace of growth was slower compared to previous years. This is understandable given the global financial crisis, rising costs in Pakistan, as well as the maturity phase, which the industry is now experiencing.

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