Telecom Operators Urge Tax Relief, Stable Spectrum Pricing to Enable Pakistan’s 5G Rollout

Pakistan’s cellular mobile operators (CMOs) have submitted a set of policy recommendations to the government, warning that persistent economic pressures and regulatory constraints could undermine the country’s planned transition to 5G services.

According to proposals shared with authorities, telecom operators have called for spectrum payments to be pegged to a stable exchange rate, with future pricing conducted in Pakistani rupees. They have also sought a 10-year, interest-free installment plan for spectrum fees, alongside reductions in withholding tax (WHT) from 15% to 8% and harmonization of general sales tax (GST) at 16%, arguing that these measures are essential to improve affordability and adoption ahead of a 5G spectrum auction.

The recommendations come as the telecom sector faces mounting macroeconomic and operational challenges. Operators highlighted that the Pakistani rupee has depreciated by nearly 100% between 2019 and 2024, significantly inflating spectrum and infrastructure costs. The impact has been exacerbated by the sector’s dependence on dollar-denominated imports, which account for around 80% of capital expenditure.

Rising energy costs have further strained operations, with fuel prices increasing by 180% and electricity tariffs doubling, now accounting for roughly a quarter of total operating expenses. Although the policy rate has been reduced to 15%, operators maintain that borrowing costs remain prohibitively high, limiting their ability to invest in network expansion.

Spectrum pricing was also identified as a major concern, with operators stating that costs in dollar terms have escalated to levels that weaken the commercial viability of acquiring additional spectrum. At the same time, Pakistan continues to grapple with a significant digital divide, with an estimated 57% of the population lacking mobile broadband access and 15% remaining completely unconnected.

Device affordability poses another challenge. Less than one percent of handsets in Pakistan are 5G-enabled, while the average price of a 5G smartphone is reported to be nearly twice the monthly income of an average household. Operators also pointed to the absence of locally relevant 5G use cases and persistent right-of-way issues, including non-standardized policies and high fees, which continue to delay network deployment.

To address these constraints, the CMOs have urged the government to treat telecom as critical infrastructure and offer industrial electricity tariffs. They have also proposed a temporary suspension of Universal Service Fund and R&D Fund contributions, followed by a reduction in contribution rates. Additional recommendations include tax exemptions for 5G equipment and handsets, streamlined right-of-way policies, and the early finalization of pending regulatory frameworks such as spectrum sharing, handset financing, and mobile virtual network operator (MVNO) rules.

Industry sources believe that without coordinated fiscal, regulatory, and policy reforms, Pakistan risks falling further behind regional peers in next-generation connectivity and digital inclusion.

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