Telcos Warn Govt of Service Degradation Owing to Financial Crunch

Telecom operators on Wednesday demanded the government that average revenue per user (ARPU) must stay above $1.5 in dollar terms for the telecom industry to survive as the cost structure is dollarized i.e. spectrum fees, capex, fuel, and electricity.

The operators warned the government of further degradation in services in the coming days, due to the non-opening of Letters of Credits (LCs), expected load shedding, and flawed policy of pegging license fees with the US dollar.

President and Group CEO PTCL & Ufone Hatem Bamatraf, Jazz CEO Aamir Ibrahim, Telenor CEO Irfan Wahab Khan, and a representative from Zong called on Federal Minister for Information Technology and Telecommunication Syed Amin Ul Haque. The meeting discussed matters related to IT & Telecom sector and issues being faced by the industry.

The industry players also talked about the pricing restrictions put in by the regulator which didn’t allow operators to increase prices. They highlighted that the current ARPU of 80 cents is the lowest in the world and stressed that for the industry to survive this must stay above $1.5.

The CEOs appraised the minister about the uncertainty caused by the fluctuating exchange rate, rising interest rates, and fuel and electricity tariffs that are making it impossible for them to make a business plan.

The devaluation of the local currency has jeopardized the business case for telecom companies, as telecom license fees and interest on installments are pegged to the US dollar. The continuous devaluation of the local currency poses the single biggest threat and precludes any sound financial planning.

Another issue raised in the meeting was the delay in finalizing the infrastructure-sharing policy which could reduce their expenses manifold. Further, due to restrictions on opening LCs, the telecom operators are unable to upgrade their capacity and meet the growing demands.

As summer is approaching, load shedding is expected to further increase, said one of the officials, adding that telecom networks are running on the backup power supply and telecom services are expected to further deteriorate.

With increasing outages in different parts of the country, it is getting more challenging to keep the network up and running. Back-up power and fuel are limited to a certain timeframe and are not for routine prolonged outages.

When asked about the 5G lunch in the country, the industry sources said that in the current economic situation in the country, it is impossible to launch the services in the current year.

The IT minister informed the CEOs that government is well aware of the issues being faced by the telecom sector. He assured that the ministry would put a complete picture of the scenario before Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar and would urge immediate actions to resolve these issues.

  • Har koi mafia hai is mulk mein. Pakistani telecos have pathetic reception even in cities especially zong and telenor. PTA should suspend their licenses for a week then they’ll come to their senses. Nonsense!

    • With no ability to buy batteries and put more towers, the services will continue to remain sub par. Also at 80cents a month what service levels are you expecting

      • If they can not provide the service levels they have committed just exit the market and LC iasue started from May last year when quotas were slashed before that what were they doing?

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