Telecom licence price pegged with USD: CMOs warn of ‘digital catastrophe’

ISLAMABAD: The Cellular Mobile Operators (CMOs) Wednesday gave SOS call to the government and warned that the country is heading towards a digital catastrophe due to the wrong policy of pegging telecom licence price with the US dollar and non-opening of letters of credit (LCs)—fearing further degradation of services in coming days, it is learnt.

CEO Jazz Amir Ibrahim, President and Group CEO PTCL and Ufone Hatem Bamatraf, CEO Telenor Irfan Wahab and Kamran from Zong called on Federal Minister for IT and Telecom, Syed Aminul Haque here. The meeting discussed matters related to the IT and Telecom sector and issues being faced by the industry.

Official sources revealed to Business Recorder that the chief executive officers of Pakistan’s largest telecom companies appraised the minister about the uncertainty caused by the fluctuating exchange rate, rising interest rates, and fuel and electricity tariffs, making it impossible for them to make a business plan.

The industry also talked about the pricing restrictions put in by the regulator which did not allow operators to increase prices. And also, the current ARPU of 80 cents is the lowest in the world. For the industry to survive this must stay above $1.5 in dollar terms as the cost structure is dollarized (spectrum fees, capex, fuel, electricity etc.

The minister was apprised that due to the expensive spectrum auction in the past, telecom companies are yet to reach a profitable position.

The devaluation of Pakistani rupees has jeopardized the business case for telecom companies, as telecom licence fees and interest on installments are pegged to the US dollar. Continuous devaluation poses the single biggest threat and precludes any sound financial planning whatsoever.

Another issue raised in the meeting was the delay in finalising infrastructure-sharing policy which could reduce their expenses manifold. Further due to restrictions on opening LCs, telecom operators are unable to upgrade their capacity and meet the growing demands.

As summer is approaching and load shedding is expected to further increased, said one of the officials, adding that telecom networks are running on backup power supply and telecom services are expected to further deteriorate.

With increasing the outage in different parts of the country, it is getting more challenging to keep the network up and running. Back-up power and fuel are limited to a certain time frame and not for prolonged outages.

When asked about the 5G lunch in the country, the industry sources said that in the current economic situation in the country, it is impossible to launch the services in the current year.

The federal minister for information technology and telecommunication informed the CEOs that the government is well aware of the issues being faced by the telecom sector. He assured that the ministry would put a complete picture of the scenario before Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar and would urge immediate action to resolve their issues.

Copyright Business Recorder, 2023