The average cellular subscriber in Pakistan now uses 7.5 gigabytes (GB) of mobile data per month, up from 2 GB in 2018, an industry official said. Aamir Ibrahim, Jazz CEO said the trend is expected to continue, with the average Pakistani cellular subscriber using up to 12 GB per month by 2028.
“If this trend continues, the average Pakistani cellular subscriber could be using up to 12 GBs per month in the next five years,” Ibrahim said. Sharing the insights, he stressed on enabling policies for the telecom sector to help continually meet the growing data demand in Pakistan.
Jazz CEO cautioned that the telecom industry's dollarised cost structure had caused the per-user average revenues to dip to $0.75 - the lowest globally.
“An ARPU [average revenue per user] below $1.5 is not sustainable for the industry to operate.” He also pointed out towards import ban restrictions on essential telecom equipment limiting telecom operators’ ability to expand connectivity and even perform routine maintenance operations impacting services reliability.
“Import ban restrictions have caused some of the newly established smartphone manufacturing units in Pakistan to shut down. This could make even the most motivated industry players give up the dream of becoming Vietnam or India in terms of local manufacturing, and ultimately further inflate the import bill.”
Ibrahim added that while the industry was striving to accelerate the local digital ecosystem, the financial health of the telecom industry remained severely impacted due to an unprecedented rise in business costs.
In the last two years, fuel, electricity, and forex rates have increased by 172 percent, 67 percent, and 86 percent respectively. Given the capital-intensive nature of the telecom sector, even a single point increase in interest rate translates into an additional financial burden of Rs1.5 billion for the industry and there has been fourteen-percentage-point increase in the interest rate compared to 2021, according to the industry official.
“To ensure that all citizens can benefit from the life-improving services that mobile broadband offers, and to improve the sector's financial health, policymakers must take meaningful interventions to address industry challenges and rebuild value into the telecoms market,” he urged.
Ibrahim was of the view that the policy of pegging the telecom license price to the US dollar was only proving “more disastrous” for the local telecom industry while further contributing to the country’s digital emergency at the same time. He urged policy interventions, such as delinking spectrum price from the US dollar, staggering license payments over ten annual installments instead of five, and implementing a regulatory approach to encourage disciplined inflationary pricing.
“Telecom and the internet are crucial utilities for productivity, much like electricity was for the third industrial revolution. Our industries, such as software development, IT-enabled services, and our marketplaces no longer rely on physical locations but instead operate on smartphones and require a reliable internet connection,” he said.
Regarding taxes up to 34.5 percent on telecom users, Jazz CEO proposed the government to consider abolition of withholding tax in the upcoming federal budget to promote the affordability of mobile broadband for low-income segments of society.