ISLAMABAD: The average per-user revenue of the telecom sector stands at just $0.8 in Pakistan against a global average of $8, making it really harder to keep its survival in the market.
According to the latest State of Pakistan’s Economy report released by the State Bank of Pakistan, the telecom sector is also grappling with challenges such as high corporate taxation, which is impacting earnings prospects.
Meanwhile, a sector-wise analysis reveals a significant drop in profit repatriation for telecom companies during the financial year 2023. This decline in repatriation, the report suggests, can partially be attributed to foreign exchange constraints and a decrease in profits for some corporations due to a slowdown in the domestic economy.
Furthermore, a breakdown of loans obtained by the private sector during the financial year 2023 indicates that telecom is among the highest borrowers with a total loan of Rs63.2 billion, and the highest fixed investment among all sectors amounting to Rs48.3 billion.
Commenting on the statistics, Jazz CEO, Aamir Ibrahim stated in a tweet that the telecom sector has been facing pressing challenges for a couple of years. He emphasized that, due to its capital-intensive nature, the telecom sector is among the highest borrowers to meet its substantial investment requirements, especially amid record-high interest rates.
He pointed out factors, including high taxation environment, an unprecedented increase in business costs, particularly the soaring dollar-pegged spectrum prices and the rupee depreciation over the years, for the lowest global average revenue per user.
Aamir said investment appetite is rapidly diminishing. This poses a challenge to ensure consistent improvement in the quality of services. He called for the swift implementation of long overdue policy interventions to enable the telecom sector to continue powering the digital Pakistan dream.
Earlier this month, The Pakistan Telecommunication Company Limited (PTCL) also reported a net loss of Rs9.28 billion during third quarter of FY23, up from a net loss of Rs5.62 billion during the same period last year. Finance costs for the period increased to Rs12.02 billion from Rs9.34 billion during the same period last year.
The company further noted that the business environment in 2023 remained affected by the unfavorable macroeconomic challenges that emerged in 2022. Increasing energy and fuel costs persist as hurdles for telecom companies, making it challenging to offer top-notch services to consumers at reasonable rates.
Similarly, Telenor Group’s Head of Asia, Borre Furberg, during a recent meeting with Federal IT and Telecom Secretary Hassan Nasir Jamy, said that the business and investment environment in the telecom sector had been challenging for some time, calling for urgent policy reforms.