ARPUs in Pakistan Drop to Record Low of Less than $1: GSMA

Mobile users in Pakistan spend less than $1 per month, which is the lowest in the world.

According to the Global System for Mobile Communications Association (GSMA) report, the average revenue per user (ARPU) in Pakistan is less than $1, making it one of the lowest in the world; the global ARPU is $8, and inflation in Pakistan has reached its highest level in 47 years.

According to the Association’s report, rising operating costs due to currency depreciation and higher energy prices have implications for the economic health of the industry. In Pakistan, the telecom and mobile phone industry are affected by increasing inflation and decreasing spending power of consumers.

Two mobile operators reported a combined loss of around Rs. 50 billion ($226 million) during the first quarter of the fiscal year 2022, while Jazz has reported four consecutive quarters of negative growth for foreign investors in the US dollar terms.

Pakistan lags behind other South Asian countries in several indicators regarding mobile internet adoption and usage. The wider coverage gap in the country as compared to neighbors highlights the non-infrastructural barriers to mobile Internet adoption.

According to the report, in Pakistan, mobile internet users are 22 percent as compared to 29 percent in Bangladesh, 53 percent in Sri Lanka, and 46 percent in India. The usage gap in Pakistan is 56 percent whereas it is 69 percent in Bangladesh, 42 percent in Sri Lanka, and 53 percent in India. In Pakistan, the coverage gap is 22 percent as compared to 2 percent in Bangladesh, 5 percent in Sri Lanka, and 1 percent in India.

According to GSMA, South Asian countries have recently implemented reforms to support the sustainability of the mobile industry and accelerate the adoption and use of mobile internet services.

In September 2021, India introduced some reforms regarding the telecom industry which helped in the success of the 5G auctions in July 2022 and the rapid rollout and adoption of 5G services.

In March 2022, Bangladesh auctioned 2.3 and 2.6 GHz spectrum to operators with a fixed base price and a spectrum license term of 15 years.

The fee payments are staggered over 10 years, giving operators flexibility with long-term financial planning. Similarly, to support operators, spectrum fees are charged annually by the Bhutan InfoComm & Media Authority (BICMA), rather than issuing upfront assignment fees.

The report recommends reforms to the government of Pakistan in taxation, telecom equipment import duties, spectrum, and licensing roadmap for the telecom sector.

It recommends reviewing and freezing the forex rate for license-fee payment, staggering license-fee installments over 10 years, and reviewing policy-mandated levies, such as universal service funds (USFs) and research and development (R&D) contributions.