‘Telecom sector moves from minutes to megabytes to moments’

ISLAMABAD: Pakistan would not be ready for 5G services in the next few years, but investment was needed for rolling out improved 4G services all over the country, Irfan Wahab Khan, CEO of Telenor Pakistan said.

“The telecom sector started its journey from minutes and voice but has moved into moments,” Khan said in an interview with The News on Wednesday.

He said the country needed smartphones in the range of $100 per set to run internet, instead feature phones were being imported in the range of 55 percent before the imposition of a ban on cell phone imports.

The government had recently approved to constitute auction supervisory committee for moving towards more spectrum auction in the current fiscal year 2022-23. Pointing out that Pakistan requires more spectrum for improving quality of service of the telecom sector, Khan said the government should come up with the right kind of terms and conditions including pricing.

Even the spectrum of Afghanistan is double than us. Pakistan’s pricing of spectrum auction is totally out for a viable business model.

The world has learnt a lesson and even China provided 5G spectrum free of cost, but asked for provision of services in rural areas.

Even 24 countries released free of cost spectrum during the Covid-19 pandemic, but here the price of spectrum is fixed on higher side. We have requested them in writing to give us more spectrum,” he added. Pakistan’s telecom market, Khan said has touched the lowest ebb on average revenue per user mainly because of inconsistent taxation policies and massive devaluation of rupee against dollar.

The spectrum auction was done for binding the telecom sector for paying in US dollars at a time when they were earning in Pakistani rupees. All these issues were adding up to the difficulties.

Alternate Dispute Resolution (ADR) Mechanism was made unfriendly for businesses as they would have to withdraw their cases from the courts for approaching the ADR mechanism.

On top of all that were power outages. He said last weekend he analysed that there were power outages of 13 to 14 hours in different parts of the country, and 50 percent of the towers were not getting commercial power across the country.

This kind of magnitude was not visualised by the telecom sector, the CEO said, citing various constraints that were arising out of the long load shedding hours.

Planned outages fall in the range of 2 to 3 hours.

The current level of outages results in cost escalation in terms of diesel-run generators as well as the capacity of batteries that were for 2 to 3 hours of outages.

“We have shifted our 12 to 13 percent towers on solar. But it is causing huge problem,” he added.

Talking about the cash margin imposed by the SBP, he said that there was need to differentiate what was an essential and what was luxury. “There is need to understand whether telecom is an essential or a luxury,” he reminded.

Ban on imports of cell phones would have a negative impact. He said he visited one of the manufacturers last week.

The production of the unit had declined 20-25 percent because of the inability to import much needed materials in the wake of the imposed ban.

Pakistan imported feature phones in the range of over 55 percent during November 2021 to May 2022 having price of less than $30 per phone, as smart phones were being imported in the range of just 15 percent.

Without increasing smart phones, the digital economy cannot be promoted, he added.

Taxation has also been very inconsistent in Pakistan for the telecom sector. Around 40 percent of airtime is deducted in shape of taxes. There are taxes which the telecom sector collects on behalf of the customers, and then the sector pays out as corporate tax.

“We the telecom sector are one of the largest contributors into the tax net,” he added.

Government had committed it would reduce advance tax from 10 to 8 percent in the last budget, instead it was jacked up to 15 percent. Things have been becoming too unpredictable.

Imposition of taxes is too high on the telecom sector in Pakistan compared to regional countries.

The CEO said that the role of digital economy in GDP growth would be more than 50 percent as the old paradigm of growth would not help stimulate the desired momentum.

Mentioning the demographic dividend, he said 25,000 IT graduates came to the market, of these only 10 percent were employable as skillset gap was widening.

IT exports touched $2.7 billion and there was huge potential. E-sports if promoted could fetch billions depending on how the sector was developed.

Smartphone manufacturing could also boost exports and fetch billions of dollars. “If India, Vietnam and Bangladesh can exploit their potential in the ICT sector then why Pakistan cannot achieve the quantum leap” he questioned.

He said Telenor Pakistan started its financial services easypaisa in the country, but flawed policies created stumbling blocks in the way of achieving financial inclusion.

Citing the State Bank of Pakistan’s waiver of charges on interbank fund transfer (IBFT) during the Covid-19 pandemic, he asked why a retailer would facilitate a customer without a commission. He urged for the revival of IBFT fee.

Telenor Pakistan CEO said international remittances were not allowed and compliance was needed for providing services such as PayPal.

Multiple regulators was another issue to deal with in Pakistan. “We will have to set goals on IT exports for jacking it up from $2.6 billion to $20 billion over the next five years,” he said, and added that it required comprehensive strategy, which should then be tracked on quarterly basis.