ISLAMABAD: Telecom industry’s Foreign Direct Investment (FDI), contribution to the national exchequer and investment declined by around 21 percent, two percent, and around one percent, respectively, during 2023-24 compared to 2022-23, which Pakistan Telecommunication Authority (PTA) linked with the overall economic situation in the country.
The PTA’s annual report released on Monday noted that FDI in telecom is on continue decline and stood at $46 million in 2023-24 compared to $58 million in 2022-23. FDI in telecom sector was $204 million in 2020-21 and $175 million in 2021-22.
Telecom sector investment is also on continue decline as it stood at $765 million in 2023-24 compared to $770million in 2022-23. Telecom sector investment was $1.657 billion in 2021-22 and $1.214 billion in 2020-21 and $1.140 billion in 2019-20.
Telecom sector investment declines to $762m in 2022-23
The authority in its annual report noted that cellular mobile operators (CMOs) registered the maximum investment which stood at $431 million in 2023-24 compared to $396 million in 2022-23. Over the last five years, total investments in Pakistan’s telecom sector have surpassed the $3.63 billion mark.
The PTA stated that the combined effect of our strategies has propelled telecom revenues to a record-breaking Rs955 billion in fiscal year 2023-24, attracting $765 million in investments and contributing Rs335 billion to the national exchequer. Telecom sector’s contribution to exchequer was Rs341 billion in 2022-23.
The authority further stated that Mobile Average Revenue per User (ARPU) rose to Rs302 per month in April-June 2024. The ARPU increased to Rs276 per month in fiscal year 2023-24 up from Rs229 in the preceding year.
Jazz and Ufone particularly stood out, achieving significant ARPU growth rates of Rs327and Rs280 in 2023-24 respectively compared to Rs254 and Rs233 in the preceding year.
Telenor and Zong also experienced growth, with their ARPU increasing Rs214 and Rs258 respectively. In April-June 2024, Jazz’s ARPU has even surpassed the Rs369 per month flowed by UfoneRs304 during this period.
At present, data revenue accounts for 65 percent of the total revenue in Pakistan’s mobile industry, underlining the importance of promoting the adoption of broadband and digital services to increase the industry’s overall ARPU.
Responding to a question regarding to decline in investment and FDI in telecom, Member Finance Muhammad Naveed said that it reflects the overall economic challenges and situations of the country.
The PTA also outlined several key challenges in rolling out 5G in the country including substantial investment, slow return on investment and availability of handsets.
The authority stated that the deployment of 5G requires a substantial investment in terms of upgrading existing networks and expanding infrastructure with the installation of small cells, advanced antennas, and extensive fibre optic backhaul.
This imposes a considerable financial burden on telecom operators as securing the required capital can become a challenge for them, particularly in a competitive market with price-sensitive consumers.
Moreover, the return on investment may take time, making them cautious about committing large capital expenditures upfront.
Government incentives and Private-Public Partnerships (PPPs) may hence be crucial to ease this financial strain and promote necessary investments. Bridging the digital divide constitutes a significant challenge in the rollout of 5G in Pakistan.
While urban areas may quickly benefit from the advanced infrastructure, rural and remote regions risk being left behind due to the high costs and logistic hurdles of extending 5G to sparsely populated areas. The availability of 5G handsets is also a barrier to widespread 5G adoption. Ensuring equitable, nationwide access to 5G services is crucial for inclusive economic growth and social development.
Pakistan’s cybersecurity landscape is rapidly evolving, with a marked increase in threats targeting critical infrastructure, financial institutions, and government entities.
The authority has warned that despite ongoing efforts for capacity-building and awareness-raising, challenges such as limited resources, shortage of skilled professionals, and inadequate public-private collaborations continue to impede progress. The global nature of cyber threats has necessitated the prioritisation of international cooperation to strengthen cybersecurity defenses, and while Pakistan is proactively establishing linkages and building synergies, there is still room for strategic actions to mitigate the entire spectrum of threats endangering the digital ecosystem.
Pakistan experienced a significant surge in cyber-attacks during July 2023-June 2024. These included malware, followed by phishing, Distributed Denial-of-Service, ransomware, and insider threats, among others.
Geopolitical factors significantly influence the tactics and targets of APT actors. The major APTs that targeted Pakistan during 2023 were Gamaredon, DoNot, Bitter, Kimsuky, Lazarus, and SideWinder; their key targets included Internet backbone infrastructures, healthcare entities, and organisations affiliated with the government.
Chairman Pakistan Telecommunication Authority (PTA) Major General Hafeezur Rehman (retd), presented the annual report to Chairman Senate Syed Yousaf Raza Gilani.
The chairman PTA emphasised the authority’s commitment to foster technological advancements, implement online safety measures, safeguard consumer rights, and promote fair competition.
He highlighted the PTA’s focus on delivering affordable, high-quality telecom services and implementing progressive regulatory frameworks that optimise digital infrastructure, stimulate investment, enhance cyber security, and improve service delivery.
The PTA chairman said that no Virtual Private Networks (VPNs) have been blocked, nor will they be in the future. The authority has the capability to block VPNs, it has not done so and has no plans to do so. He emphasised that in today’s world, attempts to conceal information are futile.
Regarding internet shutdowns for national security reasons, he acknowledged that the PTA does not have an answer. He said that questions concerning national security should be directed to policymakers.
Copyright Business Recorder, 2024