Telecom Sector Shows Slow Growth; Parvez Iftikhar

Statistics from Pakistan Telecommunication (PTA) showed a low-growth year for the telecom sector, almost all main indicators from revenues to foreign direct investment (FDI), imports and contribution to the national exchequer exhibited slow growth.

The sector’s overall profits in the year 2015 ended at Rs 449.5 billion, which is 3% less as compared to Rs 463.5 billion of the previous fiscal year. This indicates the sales of cellular mobile operators, which account for more than two-thirds of the sector’s overall revenue, dropped 1.8% to Rs 317 billion during the year under review compared to Rs 323 billion of the corresponding year.

Telecom Sector Shows Slow Growth; Parvez Iftikhar

It may be further added that cellular mobile operators overall user base declined by more than 25 million or 18% to 114.7 million in FY15, compared to a high user base of 140 million in June 30, 2014.

“The numbers indicate that it was a low growth year overall.”

Information and Communications Technology (ICT) expert Parvez Iftikhar said.

Several local loop and long distance international users started using mobile broadband third-generation (3G) and 4G mobile internet. The number of broadband users also increased by a huge margin. Meanwhile, it seems like the telecom sector could not translate the increasing number of data users to fiscal growth, Iftikhar said.

The ICT expert also said that the price war between CMOs could be the cause behind the slow growth. Statistics for FDI into the telecom sector was insignificant as well. The total FDI in the sector made a total of $121 million during FY15, which dropped by 72% as compared to $430 million of the corresponding year.

“This is something to worry about.”

Iftikhar said, adding that the investment figure for the year under review should have been higher after 3G rollout.

The telecom sector’s support to the national economy in the form of sales tax, excise duty and customs duty also dropped by almost 50%. The sector paid Rs 126 billion tax to the government during FY15 compared to Rs 243 billion of the previous year. A breakdown of tax data shows general sales tax collection declined by almost a quarter to Rs 46 billion in the review period compared to Rs 60 billion in FY14.

Other taxes, such as customs duty, withholding tax and other levies dropped by 6.4% to Rs 73.5 billion in FY15, which was Rs 78.6 billion in the last fiscal year.

“It indicates telecom imports have reduced.”

Iftikhar added.

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