Telcos’ average revenue drops to lowest in world
The average revenue per user (ARPU), a key tool for gauging the financial health of cellular mobile operators (CMOs), in Pakistan has dropped to $0.80 per month, which is lowest in the world.
In a meeting with Minister of IT and Telecom Aminul Haque, CEOs of leading telecom companies once again voiced concern over the industry’s deteriorating financial health, which was pushing the country into digital dark ages.
Jazz CEO Aamir Ibrahim, PTCL Group CEO Hatem Bamatraf, Telenor Pakistan CEO Irfan Wahab and a management representative of Zong expressed fear that the industry was heading towards collapse, mainly due to the “wrong policy of pegging telecom licence price with the US dollar and delay in opening Letters of Credit (LCs) for telecom equipment imports”.
In a tweet, Aamir Ibrahim said that for survival of the industry, its ARPU must stay above $1.5 as the telecom sector’s cost structure was dollarised in terms of spectrum fee, capex, fuel, electricity, etc.
He said that the industry also could not afford the regulatory approach to restrict tariff increase any more.
Similarly, Asia-Pacific GSMA Head Julian Gorman, while expressing concern, said that the world’s lowest ARPU indicated affordability, but it was not prescriptive and must be considered in context of financial sustainability of the industry.
“Digital Pakistan risks collapse unless meaningful action is taken to chart a path out of the crisis and for growth,” he said.
The minister was informed that due to an unprecedented increase in operating costs, primarily fuel, electricity, interest rate and currency devaluation, the industry was in a crisis.
Based on publicly available data, two telecom operators reported a combined loss of around Rs30 billion in calendar year 2022.
Sharing his views, Hatem Bamatraf, in a tweet, said that with constant devaluation of PKR against USD, the cost of doing business had significantly increased.
The expectation from telecom companies to invest heavily in infrastructure modernisation while earning in PKR, “is becoming detrimental to the dream of Digital Pakistan”, he said. “We must act now and devise a strategy for regulatory relief to avoid slowing down the digital development of the country.”
Irfan Wahab also talked about the telecom sector’s woes and in a tweet said: “While telecom industry generates its revenue in PKR, spectrum auctions, renewal and instalments are priced in USD, exposing telcos to massive currency devaluation risk.
“Need to fix this mismatch before telcos’ capacity to further power digital transformation gets irrevocably depleted.”
At a time when the industry’s profit is constantly shrinking amid increasing operational costs, it would be unrealistic to expect investment in infrastructure development and improvement in the quality of services. The weak financial health of telecom industry would also adversely impact the prospects of engagement in new spectrum transactions, despite the need for more spectrum, and the subsequent launch of 5G network, the industry said.
Published in The Express Tribune, February 24th, 2023.
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