In a sign that the rising demand for portable broadband will continue to drive mobile phone imports to Pakistan, the country imported $630 million worth of cell phones in fiscal year (FY) 2015, up 11.6% compared to $564 million of FY2014, according to statistics released by the State Bank of Pakistan.
The year-on-year (YoY) increase in mobile phone imports of FY2015 is 120 basis points higher compared to the annual growth recorded in FY2014. The country had imported $511 million worth of mobile phones in FY2013, which increased by 10.4% to $564 million in FY2014.
The overall telecom imports, however, recorded a meagre 0.7% YoY increase in the latest fiscal year. Overall telecom imports, including mobile phones, clocked in at $1.22 billion in FY 2014 compared to $1.21 billion of the corresponding year.
The demand for smartphones, as well as basic internet phones, has been on the rise since last-year’s auction of mobile broadband technology: third-generation (3G) network and the advanced long-term evolution (LTE) or 4G network.
The five mobile operators converted nearly 1 million users to their next-generation mobile network in April, the latest month for which data is publicly available.
The number of mobile broadband users (3G and 4G combined) increased by 8% to finish at 13 million at the end of April compared to 12 million of the preceding month. The country now boasts 12.8 million 3G users and 140,000 users subscribed to 4G technology.
As a result of the recently concluded biometric verification drive, the overall telecom user base has declined by 15% or 20 million to 115.4 million at the end of FY 2015 compared to 135.8 million of December 2014, but it is likely to pick up again on the back of aggressive marketing and branding by cellular operators to sell their 3G and 4G connections.
The latest data for mobile phone imports indicate that the taxes imposed by the government in recent budget have not yet affected imports. Market sources, however, say the newly-imposed taxes will likely discourage users and lure them towards the grey market.
It may be recalled that Finance Minister Ishaq Dar, while unveiling the federal budget for FY 2016, proposed a 100% increase in GST on various categories of imported mobile phones.
As per the aforesaid proposal, the GST on mobile handsets has increased from their current level of Rs150 (low-end handsets), Rs250 (mid-range handset) and Rs500 (high-end handsets) to Rs300, Rs500 and Rs1,000 rupees, respectively.
Published in The Express Tribune, July 26th, 2015.
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