Home > Shine of spectrum fades: Telecom sector posts lethargic growth

Shine of spectrum fades: Telecom sector posts lethargic growth

Overall revenue clocks in at Rs449.5b, sales of CMOs decline as well. PHOTO: FILE

Overall revenue clocks in at Rs449.5b, sales of CMOs decline as well. PHOTO: FILE


In what could be labelled a low-growth year for the telecom sector, almost all key indicators – from revenues to foreign direct investment (FDI), imports and contribution to the national exchequer – showed lethargic growth, statistics from Pakistan Telecommunication Authority revealed on Thursday.

The sector’s overall revenue clocked in at Rs449.5 billion in the year ended June 30, 2015, down 3% compared to Rs463.5 billion of the previous fiscal year. A breakdown indicates the sales of cellular mobile operators (CMOs), which account for more than two-thirds of the sector’s overall revenue, declined 1.8% to Rs317 billion during the year under review compared to Rs323 billion of the corresponding year.

It may be added that CMOs’ overall user base decreased by more than 25 million or 18% to 114.7 million in FY2015, compared to the peak of almost 140 million in June 30, 2014, courtesy the biometric verification drive.

Looking for a reason

“The numbers indicate that it was a low growth year overall,” Information and Communications Technology (ICT) expert Parvez Iftikhar said.

Many local loop and long distance international users shifted to mobile broadband – third-generation (3G) and 4G mobile internet. The number of broadband users too, increased significantly. However, it seems like the telecom sector could not translate the increasing number of data users to monetary growth, Iftikhar said.

The ICT expert said the price war among CMOs could be a reason behind the slow growth. Figures for FDI into the telecom sector were unimpressive as well. The total FDI in the sector amounted to $121 million during FY15, down 72% 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 in the wake of 3G rollout.

The telecom sector’s contribution to the national economy – in the form of sales tax, excise duty and customs duty – also declined by almost 50%. The sector paid Rs126 billion in taxes to the government during FY15 compared to Rs243 billion of the previous year.

A breakdown of tax data shows general sales tax (GST) collection declined by almost a quarter to Rs46 billion in the review period compared to Rs60 billion in FY14.

Other taxes, which include customs duty, withholding tax and other levies declined by 6.4% to Rs73.5 billion in FY15 compared to Rs78.6 billion of the last fiscal year.

“It indicates telecom imports have reduced,” Iftikhar said of the decrease in other taxes.

Published in The Express Tribune, October 30th, 2015.

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