Pakistan’s Telecom Revenue Gap: SBP Highlights 10x Global Difference

The telecom sector in Pakistan generates an average monthly revenue per user (ARPU) of $0.80. The most recent State of Pakistan’s Economy report, which the SBP published, stated that this figure stands in striking contrast to the worldwide average of over $8. ARPU is an essential metric for assessing the financial condition of cellular mobile operators.

It is essential to take note of the fact that even among the nations, the Pakistani telecom sector is functioning at less than half its income. The average revenue per user (ARPU) for India and Bangladesh came in at $1.7 and $1.6, respectively. According to the report, the telecommunications industry is having trouble overcoming obstacles such as high corporate taxation, which is having an effect on their potential earnings.

In contrast, an examination of profit repatriation by sector indicates a substantial decline for telecommunications companies throughout the fiscal year 2023. Repatriation refers to a company’s capacity to transfer profits back to its country of origin. A report from the SBP says that this drop in repatriation is because of restrictions on foreign exchange transactions and lower profits for some companies because the domestic economy is slowing down.

Due to the fact that the cost structure of the telecommunications industry is dollarized in terms of spectrum fees, capital expenditures, fuel, and electricity, among other things, the companies also face a significant challenge due to the devaluation of the local currency.

An analysis of the loans acquired by the private sector throughout the fiscal year 2023 reveals that the telecommunications industry ranks among the most indebted, having accumulated PKR 63.2 billion in loans, and has made the largest fixed investment of any sector at PKR 48.3 billion.

Aamir Ibrahim, CEO of Jazz, tweeted in response to the statistics that the telecommunications industry has been confronted with urgent challenges for the past two years. He underscored the fact that, in light of the unprecedentedly high-interest rates, the telecom industry is among the largest borrowers in order to fulfill its substantial investment obligations, owing to its capital-intensive character.

He pointed to a number of factors that have contributed to the rapid decline in investment appetite, including the lowest global average revenue per user, a high taxation environment, an unprecedented increase in business costs, in particular the skyrocketing dollar-pegged spectrum prices, and the rupee depreciation over the years.

Specifically, he mentioned that the dollar-pegged spectrum prices. Because of this, ensuring that there is a steady improvement in the overall quality of the services is difficult. He advocated for the expeditious execution of policy interventions that have been long overdue in order to give the telecommunications industry the ability to keep the digital Pakistan dream alive.

The PTCL Group also recorded a net loss earlier this month of PKR 9.28 billion during Q3 FY23. This is a larger amount of money than the net loss of PKR 5.62 billion that was reported during the same quarter of the previous fiscal year. The costs associated with financing the business during the period rose to PKR 12.02 billion, up from PKR 9.34 billion during the same time period the previous year. The company went on to remark that the negative macroeconomic problems that surfaced in 2022 will continue to have an impact on the business environment in 2023. Telecom firms continue to face challenges in the form of rising expenses for electricity and fuel, which makes it difficult for them to provide high-quality services to customers at affordable prices.

During a recent meeting with Federal IT and Telecom Secretary Hassan Nasir Jamy, Telenor Group’s Head of Asia, Borre Furberg, expressed a similar sentiment. Mr. Furberg stated that the business and investment environment in the telecom sector has been hard for some time, which necessitates the implementation of immediate policy reforms.

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