Telecom apparatus imports fall 10pc to $655mln in FY15

KARACHI: Imports of equipment for mobile telecom networks fell 10 percent to $654.558 million in the fiscal year ended June 30, an official data showed, indicating cellular operators have held back spending in infrastructure upgradation.
Industry officials said high taxes on the telecom sector – 14 percent tax on internet usage announced in this year’s federal budget and customs duty on the telecom equipment imports – have put a damper on the modern technologies rollout drive.
“Taxes discourage imports and mobile phone usage,” said Atifa Asghar, Director Corporate Communications at Telenor Pakistan.
Government pushed up customs duty on telecom machineries import to 10 percent in the last budget from the previous five percent.
Asghar said that high taxes are the biggest challenge facing the industry. “The growth may get hurt, if taxes are not rationalised,” she warned.
In July-June 2013/14, the telecom apparatus imports amounted to $734.169 million, according to the Pakistan Bureau of Statistics (PBS).
Asghar said that Pakistan’s telecom industry is led by foreign investors who look for returns on investment. “They can move to other country to get good returns,” she added.
The PBS data suggested a downward trend in the telecom equipment imports for the last three years. The import bill of base transceiver station, antenna and other telecom equipment stood at $880.554 million in July-June 2012/13.
A senior industry official, who requested anonymity, said there are multiple factors for the fall in imports.
“Taxes are one of the reasons,” the official said. “We don’t need to buy towers every year, as they are imported for a long time.”
Another official said that infrastructure investment is for the long-term and a matter of eight to 10 years. Cellular mobile operators invested in network swap – shift from 2G to 3G/4G in 2013, he added.
The government raised more than $1 billion from the auction of 3G and 4G spectrum licences in April 2014. It granted 3G spectrum licences to Russian-owned Mobilink, Chinese-controlled Zong, Norway's Telenor, and Ufone - a company jointly owned by the Pakistan government and the United Arab Emirates' Etisalat and 4G licence to Zong.
“There may be a spike in equipment imports if telecos go for further expansion,” the official said. “Currently, they focus on maintenance and upgradation is not on the priority list.”
Asghar agreed that major modernisation activities have ended.
“However, there is a need for further 3G/4G rollout and frequent maintenance,” said director at Telenor, which is rolling out in Chitral.
The Pakistan Telecommunication Authority (PTA) set two-year deadline for the rollout of 3G/4G across the country. Within one year of the auction, the market leader Mobilink has expanded its 3G/4G services in 100 cities and Ufone in 60 cities.
Currently, there are 13 million 3G/4G subscribers, while the number of mobile users has crossed 135 million.
Industry observers said just as usage of data-enabled mobile phones will increase so too the technology penetration.
Prices of feature phones are fast coming down to become affordable for the low-income major population.
“Growing public awareness will lift up the internet penetration from the present 10 percent,” Asghar said.
Mobile phone imports surged 18.19 percent to $722.618 million in FY15 from $611.400 million in FY14.