Pakistan Faces Rs 32 Billion Shortfall in Non-Tax Revenue from 5G Licenses

Pakistan is likely to encounter a significant shortfall of approximately PKR 32 billion in non-tax revenue from the expected 5G licenses for the fiscal year 2023-24. This shortfall is attributed to the non-materialization of the spectrum auction due to economic and political challenges.

The government had projected Rs. 72.597 billion from 4G/5G licenses under non-tax revenue for the current fiscal year, a substantial increase from the Rs. 50 billion budgeted for the previous fiscal year, which was later revised upward to Rs. 74 billion.

The Pakistan Telecommunication Authority (PTA) reported that, “License renewal fees from cellular mobile operators are receivable in instalments as per license terms and conditions. PTA has so far received Rs. 30.94 billion against its budgeted amount of Rs. 40.90 billion for the financial year 2023-24.” However, the Authority did not account for the remaining Rs. 32 billion anticipated in the budget document.

Pakistan Faces Rs 32 Billion Shortfall in Non-Tax Revenue from 5G Licenses

Efforts to initiate and launch 5G services in Pakistan had been underway during previous government tenures, but political instability and economic hurdles have delayed the process. Despite sufficient spectrum being available for a future spectrum auction for Next Generation Mobile Services (NGMS), cellular mobile operators (CMOs) have taken a cautious approach due to prevailing economic challenges and market uncertainty regarding the launch of 5G.

Several factors contribute to the impediments to launching 5G services in Pakistan. These include low handset penetration, limited optic fibre cable (OFC) infrastructure, low average revenue per user (ARPU), rising operating expenses (OPEX), and high taxation. These challenges have made the introduction of 5G services a complex endeavour.

International forecasts indicate that by the end of 2026, 5G will attract 3.5 billion subscriptions, generating approximately 45 per cent of the world’s total mobile traffic data. However, sources indicate that completing the 5G auction within the current calendar year is unlikely. The government would need approximately eight to ten months, in accordance with the Public Procurement Regulatory Authority (PPRA) regulations, to complete the 5G launch process.

Check Also: Spectrum Requirement for 5G Deployment in Pakistan

The process for launching 5G services involves several steps. Initially, the government will communicate its intent to all stakeholders and prepare a draft policy directive. The Economic Coordination Committee of the Cabinet (ECC) must first approve the policy. Then the federal Cabinet, chaired by the Prime Minister needs to approve it. Once approved, the policy will be shared with the PTA and the Frequency Allocation Board (FAB). The FAB will need to specify the frequency bands, while the PTA will handle the auction process.

Following the policy directive from the Ministry of Information Technology and Telecommunication, the PTA will issue a Request for Proposal (RFP) to hire consultancy services for the auction. This step will take two weeks, with an additional week required for advertising and processing through Embassies in countries like the US and the UK.

According to PPRA rules, the entire process will take 30 days to complete, amounting to a total of two months to reach this stage. Consequently, launching 5G services in Pakistan remains a complex and time-consuming process, necessitating coordinated efforts and addressing various economic and regulatory challenges.

PTA Taxes Portal

Find PTA Taxes on All Phones on a Single Page using the PhoneWorld PTA Taxes Portal

Explore NowFollow us on Google News!

Onsa Mustafa

Onsa is a Software Engineer and a tech blogger who focuses on providing the latest information regarding the innovations happening in the IT world. She likes reading, photography, travelling and exploring nature.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
Get Alerts!

PhoneWorld Logo

Join the groups below to get the latest updates!

💼PTA Tax Updates
💬WhatsApp Channel