Telcos Revenue Low Because of Internal Competition

The internal competition among cellular mobile operators (CMOs) is restricting them from increasing average revenue per user (ARPU), which is hurting their business plans, official sources in the telecom sector told informed ProPakistani.

“Telecom sector was de-regulated in 2003 and hence there is no restriction from the regulator i.e. the Pakistan Telecommunication Authority (PTA), on CMOs to increase ARPU, except for Jazz, which is a significant market player (SMP) and requires prior approval for changes in tariff to avoid disturbance in the market”, the officials said.

CMOs during the National Assembly Standing Committee on Information Technology and Telecommunication demanded a 250 percent increase in ARPU i.e. from 80 cents to $2 to meet growing expenses.

They further said that Pakistan is the 237th cheapest among the 239 countries, with the current ARPU, they cannot compete with the EU or US where it is around $40. CMOs representative also stated that they do not need other relief, but just an increase in the ARPU from the current 80 cents.

However, when this correspondent contacted senior officials in the Ministry of Information Technology and Telecommunication, PTA, and sector experts to analyze the hurdles in increasing ARPU, it was revealed that there is no restriction on three operators including Ufone, Zong, and Telenor to increase prices at any time. Pakistan telecom market is de-regulated and the government cannot intervene except for SMP i.e. Jazz to seek prior approval.

As per the rules, a SMP cannot be given free hand as it can result in a disturbance in the market, even by lowering the tariff. However, fearing loss of subscribers, CMOs are reluctant to increase rates by themselves.

“If one operator will increase package price it may result in loss of subscribers and that is why all are looking at each and competing to attract more subscribes even at lower rates”, official sources added.

PTA’s annual report noted that in terms of ARPU, the mobile sector registered modest improvement as indicated by an increase from Rs. 215 in the fiscal year 2020-21 to Rs. 220 per month in the fiscal year 2021-22. This increase can be attributed to the expansion of mobile services, the addition of new subscribers, increased usage of data services, and an increase in tariffs.

Given the rising number of internet subscribers, a major chunk of mobile operators’ revenue comes from the provision of data services. The share of data revenue in the gross revenue generated by mobile operators increased from 38 percent in the fiscal year 2017-18 to 61 percent in 2021-22.

The data ARPU of the mobile industry stood at Rs. 237 per month during 2021-22 as against Rs. 234.7 in the previous year, reflecting a minor increase of 0.37 percent, compared to an 11 percent increase in data usage per subscriber; this shows that the average price for data has further declined in Pakistan. This is also evident from the effective price per GB calculation, which shows that the price (in terms of Revenue/GB) further declined to Rs. 34.23 in 2021-22, compared to Rs. 37.86 in the previous year.

According to the PTA report, the ARPU of Jazz was Rs. 253, Ufone Rs. 205, Zong Rs. 216, Telenor Rs. 178 and the total was Rs. 220 per month during 2021-22.

  • Huh… US ARPU 40$ and US per capita income is 50 time higher then Pakistan, still they want to increase the price😏

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