Telecom industry suffers 12pc losses since lockdown

LAHORE: Telecom industry suffered around 10 to 12 percent which amounted to billions of rupees during the first three weeks due to countrywide Covid-19 lockdown while the industry provided almost Rs1.4 billion relief to the public in the form of free data, voice, WhatsApp, balance sharing and waiver of transaction fee on mobile financial service.

Further, the telecommunication industry launched a targeted social media campaign designed to provide an impression otherwise. On an average spending per operator stands at Rs350 million each on such initiatives for customer facilitation.

The industry officials briefed a top government official and sought support from the government in the wake of Covid-19 pandemic. This industry also hinted at stacking up losses as a result of which lay-offs are expected, especially at the lower executive levels.

The major loss is witnessed on account of landline and mobile voice traffic which registered a sharp decline of up to an average of 15 to 18 percent as major businesses are closed due to lockdowns. As the retail outlets are mainly closed, the supply chain is facing pressure in the form of non-availability of top-up/balance load. Due to lockdown, the industry is struggling in providing load to relevant retailers that are open due to extreme mobility restrictions. Many retailers have also closed down shops due to which sales are extremely down almost a decline of 50 percent across industry has been observed.

A large influx is seen in terms of inbound calls and customer services are dealing with an increased load of queries related to balance recharge. Where mobile top-up cards/loads are available, the shopkeepers/retailers are charging a premium on top of the actual price due to scarcity.

Further, network Operation and Maintenance (O&M) costs to keep the telecom networks up and running on 24x7 basis across the country with extreme mobility restrictions, have shot up to a great extent during reduced working hours.

However, unprecedented 15 percent increase in the demand of internet and telecommunication services was witnessed whereas capacity remains limited due to backbone and spectrum limitations. According to Pakistan Telecommunication Authority, data usage was increased by 15 percent after people stayed home and worked from there due to lockdown.

Further, the industry is facing extreme pressures as data demand have increased, yet price of packages have not been revised or increased in fact rather further decreased to facilitate lack of liquidity in the market. Most of the services are being provided at the same rate and in quite a few cases certain services are being offered free of cost.

It was mentioned that around 12 to 15 percent people were using online services whereas majority of people living in rural areas go to retailers for balance recharge which have been closed. All of such activities have stopped due to lockdown and this has negatively impacted business. With decreasing margins, low revenue, shutdown at the sales and retail channel and higher cost of business, the situation poses a great threat to the sector as a whole. The sales and distribution teams are unable to sell the product (SIM cards) and majority franchises remain closed. Pushing balance load/scratch cards to the retailers is a challenge as the retailers are closed or are operating with lesser working hours and hence affecting product availability. Customer service centres as well as call centres staff are unable to report to work amid safety protocols. The industry demanded from government a relief package for curtailing financial losses in the current emergency for a slightly longer term sustainability of their operations, while telecom is being declared as an essential service in the fight against this pandemic.

The industry officials demanded the federal government abolish withholding tax temporarily till the Covid-19 fight continues so that the subscriber can use his/her balance for more data/voice usage. The officials also sought temporary suspension of applicable taxes on data services by the federal and respective provincial governments to facilitate growth of online applications. They also sought temporary spectrum allocation to mobile operators to improve their data services offering during Covid-19 in line with other international best practices being adopted by governments in this connection. Reduction in the USF and R&D funds contribution and annual payments by telecom industry to the PTA for one year to facilitate them for sustainable operations was also demanded.