Once Vibrant Telecom Industry Dying Slow Death

The Pakistan Economy Watch (PEW) said once vibrant telecom industry of Pakistan is dying a slow death due to excessive burden of taxes.

Telecoms sector has undergone a sharp downturn over the past year, with revenue from mobile falling by 1.8 percent during 2014-15 and a dramatic drop in direct foreign investment, it said.

FDI plummeted by 72 percent to $121 million for the fiscal year ending June 30th, while the telecoms industry contributed 50 percent less in taxes in 2014-15 compared to the previous year which were Rs. 126 billion, down from Rs. 243 billion, said Dr. Murtaza Mughal, President PEW.

He said that biometric subscriber verification that resulted in overall connection numbers dropping by 18 percent. At the end of the fiscal year, a total of 114.7 million subscribers remained down from 140 million in FY14.

Dr. Murtaza Mughal said that Sales tax on numerous types of imported mobile devices has been doubled this year by the government which will is having a negative impact.

He said that cell phones and mobile internet is important tool to reduce poverty therefore policymakers should consider providing relief to telecom industry reeling under heavy taxation.

A great number of Pakistan people are unbanked that could be reached and provided financial services if the telecom and internet taxes are reduced as the services of microfinance sector leaves much to be desired.


  • It is not due to taxation only.
    Telecom prices were reduced in competition (and in some cases forced by Government) to make the business less profitable.
    In past 10 years, the major cost components have increased (power, fuel, HR, License and Technology with 3G/4G, marketing costs etc.). How can the tariffs go lower and lower every day, where all the cost components are increasing?
    It is against the basic principles of business.
    Government must allow and support to streamline and increase prices of voice and data.
    Making mobile affordable and accessible is not an indicator to prove low poverty and growth.
    If it is not timely done, Pakistan Telecom Industry will have to see a few bankruptcy stories, and eventually the tariffs have to be increased.

  • Market survey revealed the
    followings.

    Taxes on voice calls and on internet use is
    being increased time to time by the Government.

    Tariff rates have been increased, however data downloading
    limits has been decreased.

    Market competition is another cause of low revenue
    yelled.

    Financial Burdon is increasing on the poor
    customer, especially on students.

    Voice business has almost matured and now only
    data business is running the market.

    Low & slow browsing specially in CDMA &
    WIMAX has become permanent headache because common men can’t afford 3G
    high price.

    Conclusion

    Mobile & internet expenses of common men are much more
    than food cost.


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