FY2013: Telecom sector’s revenues reach all-time high

Industry sees addition of almost 10 million new cellular connections.

KARACHI:

Telecom sector’s revenues reached an all-time high, increasing by nearly one tenth, as the industry added almost 10 million new cellular connections in the fiscal year 2013, Pakistan Telecommunication Authority revealed in its annual report.

With a major contribution of Rs438 billion or $4.1 billion coming from the five cellular mobile operators (CMOs), telecom sector’s revenues increased to Rs445.7 billion at the end of June 2013, up 9% from Rs409 billion in FY2012.

The sector’s revenues increased by a third, 33.5% to be exact, during the last five years when compared with Rs333.8 billion the industry had grossed in FY09.



The steady growth came on the back of the country’s growing teledensity, which stood at over 75% at the end of FY13, translating to an increase of almost four percentage points over 71.73% in the previous fiscal year. CMOs that cover 71.7% of the population were again the major contributor.

Total number of cellular subscribers increased by 7% to 128.9 million in FY13 when compared with 120 million as of June, 30, 2012 – indicating a steady growth from FY10 to FY13.

When it comes to tax

Telecom is one of the highest tax-paying sectors. The sector, on average, has contributed Rs119 billion a year to the national exchequer between FY09 and FY13. However, its contribution to the national exchequer decreased to Rs124.7 billion during FY13, down by 6.5% from Rs133.4 billion of the last fiscal year.

A breakdown of tax collection showed a 64% year-on-year decrease in PTA’s deposits to the exchequer. The report, however, added that the PTA received Rs6.8 billion from the operators under various regulatory heads and deposited into the nation exchequer till March, 2013.

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The investment in the telecom sector saw a significant increase. During FY13, a total of $451 million investment was reported in the sector, which translates to a 47% growth over $240 million in the previous year – CMOs were again the major contributor, investing $421.5 million during the period under review.

With the addition of FY13 telecom investment, the sector was able to attract over $12 billion of investments from FY06 to FY12, according to the report.

The report, however, said the companies reduced their investments in the last two years as they already established most of their networks.

Telecom sector had attracted $6 billion in foreign direct investment (FDI) since FY06 but FY13 ended on a negative note. FDI in telecom sector remained on the negative side of the scale as outflows of $408 million were reported during FY2013.

However, the telecom regulator stated in its report that the FDI outflow could be turned around with auction of mobile spectrum for high-speed internet services, which it expects to complete in the third quarter of FY14.

The report also showed that the imports of telecom equipment including mobile handsets reached almost $1 billion – $918 million to be exact – in FY2013. This, however, was a slight decline from $954 of FY2012, according to PTA’s report.

“The telecom sector continued to grow on a steady pace during FY13 with telecom services, covering 92% of the land area and 75% of the population,” PTA Chairman Syed Ismail Shah was quoted in the
report as saying.

While expressing his vision, the chairman stated he was aiming for an advanced, technology driven, consumer oriented and business friendly environment where fair competition, affordable tariffs, high quality of services and extended land coverage would be the success benchmarks.

Published in The Express Tribune, January 4^th, 2014.

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