Despite new revenue stream in shape of Mobile broadband with millions of new paying customers for 3G and 4G services, cellular mobile phone companies generated a total of Rs. 317.02 billion in revenues during 2014-15, down from Rs. 322.68 billion last year.
Recently shared financial stats of telecom sector from Pakistan Telecommunication Authority hints towards the entire telecom sector under performing during the year, mainly due to massive taxes and undue burden from the government under the head of duties, custom charges, withholding taxes and sales taxes.
Figures show that government’s goals and desire for generating more revenues from telecom sector by taxing it excessively back-fired because telecom sector’s contribution towards national exchequer declined massively during the reported period.
Telecom sector contributed Rs. 45.8 billion under the head of GST, 25% down from the figure of Rs. 60.1 billion a year ago.
WHT, custom duties and other tax collections also dropped from Rs. 78.6 billion during 2013-14 to Rs. 73.5 billion during 2014-15, demonstrating a 7 percent decline despite the growing demand of gadgets, mobile internet and other accessories after introduction of 3G and 4G technologies in the country.
Total contribution of telecom sector towards national exchequer stood at Rs. 126.3 billion during 2014-15. Last year, this contribution was about 243.3 billion which included Rs. 104.6 billion under the head of 3G/4G license fee of various operators.
Downward trend in revenues was also witnessed for local loop, LDI and wireless local loop segments.
This trend will only persist in coming years as more taxes were added this year and are feared to have a negative impact on already declining revenues of telecom sector.
Just to recall, 14% withholding tax on internet in entire Pakistan, 19.5% GST on internet, 8% minimum tax on service companies, and double custom duties on smartphones and feature phones were introduced during this year’s budget in July 2015.
Experts say that these stats are clear indication of how government has not only failed the telecom sector but itself as well. “These figures have a lesson for government, that it must learn if it wants the telecom sector and national economy to grow”, they said.
You can see more in the below infographic, which will give you an idea of how Telecom sector has performed during the years, despite new addition in subscribers, services (namely the 3G and 4G) and coverage.