Telecom companies declare ‘Digital Emergency’

Declaring a “digital emergency,” Pakistan’s telecom sector revealed a doomsday scenario, arguing that its net profit will become a deficit by the end of the current calendar year 2022.

Because of the weakening economy, the telecom industry would go from a net profit of $188 million in 2021 to a loss of $287 million by the end of calendar years 2022 and 2023.

“We have faced tremendous problems, and now it is a matter of survival.” The regulator will not allow the telecom industry to raise its tariffs. The average revenue per user (ARPU) has dropped dramatically, with Pakistan now having the lowest. In such a scenario, the telecom sector is on the verge of collapse, and our foreign owners would not allow us to incur debt to satisfy our commitments and those of our shareholders,” two senior telecom executives warned a small group of journalists during a press conference on Thursday night.

Furthermore, the 74 percent cost to revenue statistic is an estimate of above EBITDA cost for 2025, which is now at 58 percent. This forecast is only valid if there is no more significant deterioration.

They complained that although earning in rupees, they had to pay spectrum or renewal fees in dollars. According to the GSMA research, Pakistan ranks 233rd out of a total of 238 nations in ARPU.

Instead of strangling measures such PTA restrictions on rising rates, the sector needs better regulation. According to them, there was a sense that the telecom business was profitable, but the sector has been on a decreasing trend since 2016. There are now four companies in the telecom business, but given the prevailing revenue against cost ratio, mergers or closures are on the horizon.