The GOP Accepts Three Major Demands of Cellular Companies

The government has accepted three major demands of cellular companies including industry status, suspension of 12.5 percent withholding tax, and grant/auction of additional spectrum. The demands were accepted during a high-level committee meeting.

The committee was constituted on the directive of the prime minister to address the issues of cellular mobile operators and formulate recommendations for onward submission to the Prime Minister’s Office.

The GOP Accepts Three Major Demands of Cellular Companies

Secretary for Ministry of Information Technology and Telecommunication Shoaib Ahmed Siddiqui, who chaired the 2nd meeting of the committee, said that the telecom sector was given industry status back in 2004, but the same was not implemented for the last 16 years.

The committee has recommended the Ministry of Industries and Production to notify the industry status for the telecom sector.

The Ministry of Industries and Production had agreed to the proposal that the telecom sector should be given functional industry status.

He further said that the National Electric Power Regulatory Authority (NEPRA), which determines the tariff, has been asked to work it out for the telecom sector, while treating it as telecom industry.

The federal secretary said that it was also agreed to suspend withholding tax of 12.5 percent for telecom sector during the Covid-19 period as a relief for cellular companies and consumers.

The committee recommended to the Federal Board of Revenue (FBR) to consider the recommendation for implementation, he added.

The telecom operators shared serious interest in additional spectrum auction in Pakistan, Azad Jammu Kashmir (AJK) and Gilgit-Baltistan (GB) to facilitate quality mobile broadband services necessary to assist people especially students and professionals to work from home, and comply with Covid-19-related advisory.

The committee decided to move a summary to the federal cabinet, while seeking policy directive for auction/additional spectrum for telecom companies in Pakistan.

However, for the AJK and GB, the committee recommended the Ministry of Kashmir Affairs to prepare a proposal in this regard, Siddiqui added.

Some issues have already been raised with various concerned departments, while some are related to policy matters, and recommendations would be finalised for the federal cabinet soon, he added.

The NADRA was recommended in the first meeting of the committee to reduce charges of biometric verification of the SIM, especially in view of this situation resulted after the Covid-19 in the country.

According to official documents, telecom operators had prioritized some areas for a dialogue at the highest level within the Government of Pakistan for consideration and early resolution including (i) fair, transparent, predictable spectrum roadmap to help investors in taking predictable and informed decisions; (ii) immediate award of the AJK/GB spectrum all four operators to accelerate broadband. Next Generation Mobile Services (NGMS) auction is pending in the AJK and NA and GB region. The PTA being the adopted regulator for AJK/GB needs to conclude NGMS spectrum auction as this will provide a level-playing field to all operators and help in scaling up quality coverage of 3G/4G-based networks. According to operators it can help the government to generate $100 million; (iii) release and harmonization of existing and future spectrum to maximize utility and government yields ? policy of government driving license renewals needs to be revised to allow release and harmonization of existing and future spectrum.

This harmonization would also allow the government to award additionally available top up spectrum, as per Telecom Policy 2015, to all operators as per their respective additional demands and also bring additional revenue to the government to the tune of $500 million.

Continued collection by the NADRA at very significant rates per verification has been a concern for the cellular industry as it is continuous cost for the cellular industry (around Rs140 million per month).

Since mobile operators invested into the whole of biometric verification programme and any costs incurred by the NADRA for setting up the biometric verification process have long been met many times over, it would be appropriate for the government to reduce the NADRA verification charges to at least the level of charges given to the financial services transactions.

According to the telecom companies, it would save Rs1.5-2 billion per annum for the telecom sector.

Recommended Reading: Govt. is Expected to Rationalise Taxes on Telecom Sector in the Coming Budget (2020-2021)

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