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Telecom Sector Contributed Over Rs 173 Billion as Taxes This Year

The telecom sector contributed Rs 173.22 billion to the national exchequer in terms of taxes, regulatory fees, initial and annual license fees, activation tax, and other charges during the first two quarters of the fiscal year 2020, revealed Economic Survey 2019-20.

The survey stated that the telecom sector is a significant source of revenue generation for the national treasury.

The commercial launch of 3G and 4G services has opened new opportunities for revenue generation for mobile operators and has enabled the development of new applications and database services. People of Pakistan are quickly adapting to these new technologies and services.

Annual revenues from the telecom sector have reached an estimated Rs. 553.8 billion during the fiscal year 2019, up from Rs. 440 billion last year, registering an annual growth of 13.3 percent. Revenues from the telecom sector have reached an estimated Rs 276.5 billion in the first two quarters of the fiscal year 2020.

From July 2015 to February 2020, the telecom sector has attracted over $ 1.5 billion FDI inflows, whereas a total of $ 8.5 billion has been invested by telecom players in Pakistan since 2002.

Cellular mobile subscribers

Cellular mobile subscribers (number of active SIMs) in Pakistan reached 168.9 million at the end of February 2020 compared to 161 million as of the end of June 2019 depicting the growth of 4.9 percent in eight months.

Mobile and fixed broadband subscriber

Mobile and fixed broadband subscriber base showed strong growth from July to February FY2020. At the end of February compared to 71.24 million in 2020, broadband subscribers stood at 82.2 million as compared to 71.24 in FY2019.

Introduction of 5G technology in Pakistan

The survey noted that 5G is the latest technology which is available only in a few countries so far. To meet rising businesses and consumer’s demand for faster and more reliable mobile broadband services, PTA has allowed operators to test new technologies such as 5G. This will enhance the productivity and competitiveness of businesses to reshape the socioeconomic fabrics of our society.

CMOs’ license renewal

Three mobile licenses renewals are under process, and companies have already deposited $ 688 million in the national treasury, which is 50 percent of the total amount. This was done as per Government of Pakistan’s Policy Directive dated 09 May, 2019 for renewal of the mobile cellular license of three operators, i.e., Telenor, Jazz and CMPak setting per megahertz (MHz) renewal price for frequency spectrum in 900 MHz and 1800 MHz as $ 39.5 million and $ 29.5 million, respectively.

Device Verification System (DIRBS) on Road to Success

PTA has successfully launched DIRBS in the current fiscal year, and very encouraging results have been witnessed in terms of evaporating grey market, a substantial decrease in illegal/counterfeit devices, a significant drop in snatching/theft of devices and increased revenue to the government.

FBR collected revenue of over Rs. 28 billion in the first 6 months of FY2020 from mobile import taxes, which is expected to cross Rs. 50 billion by the end of the fiscal year as against Rs. 22 billion last year showing a potential increase of about 127 percent.

PTA has also facilitated local manufacturing/assembling of mobile devices. Local manufacturing has been kick-started, and Pakistan produced over 11.7 million handsets in 2019, which is 126 percent higher than the previous year.

Commercially imported legal handsets for the same period stood at 16.3 million, which is 26 percent higher than the previous year. A total of 1,597,388 individuals have registered their devices during JanuaryMarch 2020 out of which 666,767 registered through the FBR baggage rule exemption and others 1,378,099 registered after the payment of FBR custom duties.

Commercial imports and locally assembled devices have increased tremendously after the launch of DIRBs in January, 2019.

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