The mobile network operators world body has sent mobile network operators the world over a new warning to Pakistan. The high telecom tax rate could stall 5G plans in the country, says the GSMA.
The warning was issued at the launch of GSMA Digital Pakistan 2030 report. The message was brought directly to the event by Julian Gorman, GSMA Head of Asia Pacific.
Gorman admitted there were some positive developments on one front. He added that the changes in the spectrum management have created a better investment climate for telecom companies in Pakistan.
He complimented them, but with a definite note of warning. If there is too much taxation, he warned, we won’t get more investment in next generation networks, including 5G.
The figures are significant behind that warning. The report estimates the contribution of telecom sector in Pakistan. Taxes and regulatory charges of $278 billion just in the year 2025.
The heart of the issue was summarized by GSMA When companies are under severe financial strain, they reduce their expenditure. That directly poses to the speed of the country 5G services deployment and expansion.
It is not the first time GSMA has expressed very concern. During GSMA Digital Nation Summit held last year, Gorman cited three areas of challenge to Pakistan digital growth high taxes, limited spectrum and policy inconsistencies.
That earlier report identified certain taxes. In Pakistan, customs and taxes are imposed on the import of smartphones up to 40 percent and mobile broadband is subject to several more layers of taxation.
Gorman has remarked that a reduction in telecom tax can be achieved even in the presence of an active IMF programme as the case of Argentina has shown. Argument is in response to the notion that tax relief and IMF compliance are two incompatible options.
Real economic price to a lack of action. Prior to the decision, GSMA and the Telecom Operators Association of Pakistan had estimated that the cost of country to the lost economic benefits if the spectrum is not released will be between $1.8 billion to $4.3 billion over 5 years.
A report by the Asian Development Bank (ADB) earlier this year described other obstacles 5G technology will encounter in Pakistan. These lowest average revenue per user (ARPU) in the world, and limited spectrum availability, power outages and internet shutdowns which further discourages operators to invest in the sector.
GSMA new report also indicated significant strides towards digital inclusion, with mobile internet access for women increasing from 45 percent to 53 percent and the mobile internet gender gap decreasing from 25 percent to 8 percent.
GSMA said that Pakistan digital economy is on a better footing overall, but added that cybersecurity and data governance will play a pivotal role in continuing that momentum in the future.
On the same day the Senate Standing Committee on Cabinet Secretariat discussed a related telecom issue: Right of Way permissions for telecom companies separately. Senator Shahadat Awan raised that Federal IT Minister Shaza Fatima and IT secretary had not participated in the session, adding that they had been invited to attend in the former.
The lack of it was due to some confusion, said Committee Chairman Rana Mahmood-ul-Hassan, adding that both of them should be invited to brief the Members of the Committee at its next meeting. It joins the many indicators of telecom-sector policy engagement in Pakistan being significantly behind the industry own sense of urgency for reform, coming as it does the same week as GSMA tax warning.
