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| Mobile phone use drops by 8 to 9% |
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Monday, July 14, 2008
Mehtab Haider
Islamabad
The cellular companies have witnessed 8 to 9 per cent reduction in usage of mobile phone owing to increased taxation of 21 per cent on telecom services after the announcement of budget 2008-09, it is learnt.
There are eleven departments including intelligence agencies from which the cellular companies require to get permission before installing its towers to make its network operational in any area of the country, said the sources.
“We have witnessed decreased usage of mobile phone in terms of decreased minutes and mobile subscribers. It can easily be estimated that there is reduction in usage by 8 to 9 per cent after announcement of unfair taxation,” sources in cellular companies told The News here on Saturday.
They severely criticized the government’s decision to impose flat tax rate of Rs500 on import of mobile phone set. “The poor are paying more taxes compared to the richest people who imported latest phones,” the sources added.
When Ufone’s Chief Marketing Officer (CMO) Aasher Yaqoob was asked, he confirmed that the heavy taxation imposed by the government in the budget 2008-09 is all set to hamper the growth of the cellular industry in the current fiscal year.
“Mobile industry invested over $6 billion in last four years and its share in overall investment stood at 66%,” he said and expressed his apprehensions that the industry’s growth would be affected negatively in such a condition.
The share of cellular industry’s investment was 1.2 per cent by 2001 which touched its heights by witnessing 54% by 2004-05.
However, the sources said there are total 50 million customers with 80 million SIMs in the country. There is potential of 100 million subscribers but the telecom policy in terms of taxation measures will create stumbling blocks in the way to achieve the desired results.
The Federal Board of Revenue increased the rate of Sales Tax and Federal Excise up to 21 per cent for telecom services in the budget 2008-09. “We earn Rs1 but invest back Rs1.50 into the business again for meeting requirements of expansion plan,” said the sources.
Out of five major players in the market, only two are making profit while remaining three companies are running into loss, increasing apprehension of closure or merger in years to come.
“Unless we fix the piling up issues, the industry will be in difficult situation,” they added.
Pakistan’s cellular industry started its operation by 1991 with two players Paktel and Instaphone. The Mobilink got licence by 1994. But the government imposed Withholding Tax by 1995, which resulted into growing difficulties for the industry.
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ISSN 1563-9479 
