Telecom Sector of Pakistan Seeks Critically-needed Fiscal Space

According to the latest reports, the telecom sector of Pakistan has sought urgent policy interventions from the government. It wanted to provide critically-needed fiscal space in order to ensure its survival including denominating spectrum payments in rupees. Furthermore, the telecom sector wants to:

• extend the payment terms to 10 years instead of five
• suspension of the industry’s annual contribution to the Universal Service Fund (USF) and Ignite for two years
• reduction in withholding tax from 15 percent to eight percent on essential telecom services

The Telecom Sector Of Pakistan Needs Fiscal Space To Ensure Its Survival

Reports claim that these proposals were conveyed to Syed Aminul Haque, the Federal Minister for IT and Telecommunication, who chaired a meeting that was attended among others by:

• Aamir Ibrahim
• the CEO of Jazz, Irfan Wahab Khan,
• the CEO of Telenor, and Hatem Bamatraf of Ufone

Heads of the telecom companies informed the Federal Minister of IT about different issues of the telecom industry. In addition to that, they also offered thanks to IT Minister Haque for his strong cooperation with the telecom industry.

The CEOs of telecom companies recapitulated that a healthy and stable telecom sector, the foundation of a country’s digital ecosystem plays an important role virtually in all sectors of the economy. No doubt, it is a prerequisite for consistent improvement in service quality for users as well. However, the telecom industry’s financial health is badly impacted due to an unprecedented rise in the cost of operations:

• primarily fuel
• electricity
• interest rates
• constantly increasing USD-pegged spectrum installments
• Severe damages caused to critical digital infrastructure by floods to the extent that now it threatens the very survival of the telecom sector

Due to all these reasons, the telecom sector seeks urgent policy interventions from the government in order to provide critically needed fiscal space to ensure its survival and support Pakistan’s digital inclusion objectives. It further includes denominating spectrum payments in rupees and aims to extend the payment terms to 10 years instead of five. The policy interventions also want the suspension of the industry’s annual contribution to the Universal Service Fund and Ignite for two years; and a reduction in withholding tax from 15% to 8% on essential telecom services.

Haque stated that he is well aware of the departmental issues confronted by Pakistan’s telecom industry. He said that they are struggling to settle these issues to stabilize investment in the IT and telecom sectors.

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