In a meeting with the minister of IT & telecom, leading telecom CEOs expressed concern about sector’s deteriorating financial health, which was sending nation into a digital dark age.
Pakistan now has the lowest average revenue per user (ARPU), which is a crucial indicator of the financial health of cellular mobile operators (CMOs), at $0.80 per month.
In a meeting with the minister of IT and telecom, leading telecom CEOs expressed concern about the sector’s deteriorating financial health, which was sending the nation into a digital dark age.
The CEOs of Telenor Pakistan, PTCL Group, Jazz, and Zong all expressed concern that the industry was in danger of collapsing as a result of the “wrong policy of pegging telecom licence prices with the US dollar and delay in opening Letters of Credit (LCs) for telecom equipment imports.”
Aamir Ibrahim stated in a tweet that the industry’s average revenue per user (ARPU) must remain above $1.5 to survive, as the cost structure of the telecom sector has been dollarized in terms of spectrum fees, capex, fuel, electricity, etc.
He said that the industry also could not afford the regulatory approach to restrict tariff increases any more.
Julian Gorman, the head of the Asia-Pacific GSMA, similarly expressed concern while stating that while the lowest ARPU in the world indicated affordability, it was not prescriptive and needed to be taken into account in the context of the industry’s financial sustainability. If significant steps are not taken to find a solution to the crisis and promote growth, “Digital Pakistan risks collapsing,” he warned.
The industry was in a crisis, it was told to the minister, due to an unprecedented rise in operating costs, primarily fuel, electricity, interest rates, and currency devaluation. Two telecom operators reported a combined loss of about Rs30 billion in calendar year 2022, according to publicly available data.
In a tweet expressing his opinions, Hatem Bamatraf claimed that the cost of doing business had significantly increased due to the ongoing depreciation of the Pakistani rupiah (PKR) against the US dollar. It is becoming detrimental to the dream of Digital Pakistan to expect telecom companies to make significant investments in infrastructure modernization while earning PKR, he claimed.
“We need to take immediate action and come up with a plan for regulatory relief to prevent slowing down the nation’s digital development.”
Irfan Wahab also discussed the problems facing the telecom industry and stated in a tweet that “while the telecommunications industry generates its revenue in PKR, spectrum auctions, renewals, and instalments are priced in USD, exposing Telcos to massive currency devaluation risk.” Before Telcos’ ability to support further digital transformation is irrevocably depleted, this mismatch must be corrected.
Expecting investment in infrastructure development and an increase in service quality at a time when the industry’s profit is steadily declining amidst rising operational costs is unrealistic.
Despite the need for additional spectrum and the subsequent launch of the 5G network, the telecom industry claimed that its poor financial condition would negatively affect its chances of participating in new spectrum transactions.