Internet Taxes are Negatively Impacting Telecom Industry: Moody Reports Confirms

Moody’s, a leading provider of credit ratings, research, and risk analysis, has recently published a report to highlight the potential of Pakistan’s and Bangladesh’s Telecom industry. The reports highlights Mobilink from Pakistan and Banglalink from Bangladesh as two organizations with a strong potential for growth.

As per the report published by Moody’s, Mobilink has a substantial potential for revenue growth owing to lower average revenue per user (ARPU) and wireless penetrations as compared to other Asian countries.

The report mentions that Mobilink operating in a 5 player market, known for its fierce competition, has managed to sustain and enhance its market leadership position and currently enjoys the largest market share of 29%. Banglalink is the second-largest operator in Bangladesh and has over 25% of market share among the 6 companies operating in Bangladesh.

However, the report goes on to state that in spite of a stable current standing and a strong potential for future growth the evolving regulation in Pakistan and Bangladesh is set to hinder the augmentation of number of subscribers and revenues.

The report places an emphasis on the much talked about fact in recent reports on ProPakistani where we highlighted the impact of excessive taxation on the Telecom industry, especially on Data.

The report confirms that the doubling of taxes on various categories of imported handsets had a significant impact on the phone penetration in Pakistan. This increase in tax, therefore, curbed the growth of cellular subscribers in the country as Pakistan is largely comprised of low-income population which is extremely price-sensitive.

Furthermore, the Punjab Government introduced a data tax of 19.5% to a province which has the largest number of cellular subscribers resulting in a momentous impact on revenues. The tax was a ripple effect of the taxes imposed on data by Sindh and KPK provinces.

Moody’s report draws interesting parallels between Mobilink and Banglalink by stating that the Governments in both countries is introducing new taxes which is ominously hampering the growth of revenues and is shunning the potential for expansion in these two markets.

Despite these challenges, the report asserts that both these companies are doing immensely well in their respective markets as a result of coherent, innovative and avant-garde strategies.

Mobilink has recently sustained its lead after the biometric re-verification campaign, which resulted in authentication of 87% of its entire customer base and reported an increase of over 1% in its market share. This report corroborates Mobilink’s potential for growth as it builds on past successes and eyes future growth.

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