Rs 29 per GB, US$1 ARPU: Can Pakistan’s Telecom Model Sustain 5G Investment?

Pakistan’s telecom market is entering a difficult phase in which consumers continue to enjoy some of the world’s cheapest mobile data, while operators face rising investment requirements and remain constrained by some of the lowest subscriber revenues globally.

A mobile user in Pakistan currently pays around Rs 29 per GB, while average revenue per user, or ARPU, stands at roughly US$1 per month. That combination has helped keep connectivity affordable, but industry stakeholders say it is becoming increasingly difficult to sustain as data consumption rises and operators prepare for a fresh round of spectrum payments, network expansion and 5G investment.

The pressure is particularly visible after the recent spectrum auction. Telecom operators are collectively expected to pay at least US$510 million for newly acquired spectrum, with around half of that amount due next year.

At the same time, industry estimates suggest that each operator may need to upgrade more than 1,000 mobile sites every year to increase network capacity, improve quality of service, and prepare for wider 5G deployment.

The challenge is that this investment cycle is beginning at a time when the cost of running telecom networks has already increased sharply.

Energy, imported network equipment, freight, and insurance have all become more expensive because of inflation, currency volatility, and geopolitical tensions. Brent crude, for example, has risen from around $60 per barrel in December to nearly $84, adding further pressure to operating expenses.

Telecom companies are already estimated to invest between 15% and 20% of their annual revenues in network expansion and modernization. The concern now is that traffic growth and investment requirements are rising faster than the revenue generated by each subscriber.

For Pakistan, this is a significant shift.

The country has built one of the region’s largest mobile markets, with more than 208 million cellular subscribers and around 160 million mobile broadband users. Mobile connectivity now supports digital payments, e-commerce, entertainment, education, and public services, making network quality increasingly important to the wider economy.

Yet the commercial model remains heavily dependent on keeping prices low.

That is bringing the country’s retail tariff framework back into focus.

Under the current regulatory regime, operators designated as having significant market power require prior approval from the Pakistan Telecommunication Authority for upward retail tariff revisions. The framework was introduced to protect competition and consumers where a company holds substantial market influence.

But the market around that framework is changing.

Industry consolidation, additional spectrum, rapidly growing data consumption, and the transition toward 5G are all increasing the capital requirements facing operators.

This raises a broader policy question: whether Pakistan can continue relying on an ultra-low-price telecom model while also expecting operators to fund network expansion, spectrum costs and next-generation technology.

Several international markets take a different approach. In the United Kingdom, United States, Canada and Australia, routine mobile tariffs are generally determined commercially, while regulators focus on competition, transparency, consumer protection and abuse of market power. India and Malaysia also largely follow market-based approaches to retail telecom pricing.

Greater commercial flexibility would not necessarily mean removing oversight.

Consumer notification rules, pricing transparency requirements and safeguards against misleading offers, discriminatory pricing, predatory conduct and abuse of market power can continue alongside commercially determined tariffs.

The broader debate is therefore shifting from simply keeping tariffs low to determining what level of pricing is sustainable for both consumers and networks.

Industry participants increasingly describe this as a question of “sustainable affordability”—preserving access while allowing sector revenues to grow enough to support investment in capacity, quality of service, and 5G.

Gradual tariff rationalization could form part of that equation, particularly as spectrum payments and network upgrades accelerate. Any such move, however, would have to be balanced against household affordability, competitive pressures, and strong consumer safeguards.

For Pakistan’s telecom market, the key question is becoming increasingly clear: can a sector generating around US$1 per subscriber each month continue to finance the infrastructure required for the next generation of mobile connectivity?

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