Telecom Crisis

The telecom sector has been raising concerns over the consistent rupee devaluation and subsequent pegging to the US dollar. The cost of doing business has significantly increased and the demand for services is rising per day. Pakistan’s teledensity has increased to 86.34 percent with 193 million cell phones and 122 million mobile broadband subscribers. This is great news as the digital barrier is consistently being pushed and the sector presents potential but with increased licensing fees and interest on installments, digital service delivery has taken a hit.
With every devaluation cycle, the overall price and profitability are pushing industry limits. With commodity prices skyrocketing and regulatory dues on industry players, it is unfortunate that such troubled waters have been unleashed. Last month, the telecom sector expressed concerns over import dependency and maintenance as well as the restrictions on letters of credit. In another troubling revelation, PTA has reported an increase in expenses by 239% since 2018.
The future is increasingly digital and while Pakistan is a smaller telecom market in terms of overall volume, it is growing with international trends. The telecom sector also represents the potential for FDI and it is true that it garners high revenues as well. In 2021-22, the use of telcos services grew and recorded a high revenue of Rs 694 billion. As mentioned, it attracted $2.07 billion in investments and contributed Rs 222.7 billion in taxes. We also saw a rise in locally manufactured products.
The biggest concern is the mismatch of revenue earned in local currency and renewals and installments paid in US dollars. The denomination is always difficult to balance with a plummeting currency and so an alternative to industry woes must be deliberated. This situation is serious as a strong telecom sector is essential to state survival. A 25.93 percent devaluation has left the country unstable. With no immediate signs of relief, telecom should be seen as a national asset and the policy reforms suggested by the industry itself should be taken seriously.

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