Cellphone usage: Telecom sector welcomes business friendly govt moves

Operators believe favourable relations are necessary for upcoming 3G auction.

KARACHI:

The telecom sector, which is in the process of finalising the 3G auction in Pakistan, welcomed steps by the government to facilitate the industry, the most recent of which was not suspending cellphone activity during the Eid holidays; a practice commonly adopted by the previous government and one which lead to substantial losses. The move is likely to regain the telecom sector’s confidence in Islamabad’s regulatory policy.

This stance by the government may prove to be a positive step towards an investment-friendly environment and boost confidence among the country’s telecom operators ahead of the auction for next-generation mobile spectrum – which is likely to add over $1 billion to the cash-strapped economy.

The telecom sector has had a bumpy ride during the past few years. The previous government’s regulatory policies also dented the sector’s confidence to a great extent, according to industry sources.

The previous government would regularly suspend the country’s mobile phone services on every special occasion to counter potential threats of terrorism – causing industry-wide revenue losses between Rs500 million to Rs1 billion on some occasions, according to industry estimates.

According to industry officials, the telecom sector has invested over $10 billion in the country – a bulk of which came in the last 10 years. It is the highest tax-paying sector, contributing Rs133 billion in fiscal 2012 alone. By contrast, the industry is faced with saturation in terms of subscriber growth. The earnings, too, have suffered because of intense competition and low average revenue per user (ARPU) – Pakistan has the lowest ARPU in the region.

The decision to not suspend cellular services this time around, according to sources, was therefore welcomed by the industry, especially when seen in the context of a recent statement by Minister for Information and Broadcasting, Pervaiz Rashid, who proposed that the CEO of the telecom firm whose [unverified] SIM was involved in any terrorist activity should be apprehended.

Rashid argued that it was the service providers’ fault to issue SIMs without proper verification of customers.

Rashid’s statement, according to telecom sources, irked the leadership of mobile operators who later raised the issue in a meeting with Anusha Rehman, Minister of State for Information Technology and Telecommunication.

Published in The Express Tribune, October 20^th, 2013.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.