Currency devaluation mars mobile operators’ expansion efforts

April 03, 2024

By Amir Saeed

 Devaluation of the local currency against the US dollar has added to the woes of the telecom sector operators in Pakistan as they have to import most of the equipment. Talking to WealthPK, Asif Aziz, Chief Business Officer at cellular service provider Jazz, said the devaluation of rupee against the greenback had diminished the prospects of operators to expand their capacities and operations. He said that economic slowdown had led to a decrease in cellular mobile subscribers and cellular density in 2023 compared to 2022. “The quality of service provided by the mobile operators in Pakistan is not up to the global standards. Operators need to continuously invest to stay abreast with the changing technology landscape, in addition to investing in expanding the network and capacity,” he pointed out.

Speaking to WealthPK, Tariq Baig, Head of Franchise Support at Ufone 4G, said that the continuous depreciation of rupee against the US dollar had increased the cost of doing business in Pakistan, making it difficult for telecom companies to invest in modernisation. The telecom sector generated Rs850 billion in terms of revenues in FY23, showing a growth of 17% over the previous year. This growth was in terms of rupee, whereas in terms of dollars, the revenue decreased from $882 million in 2018 to $762 million in 2023. The telecom sector witnessed a huge investment of $6.2 billion during the period from 2018 to 2022.

Finance Bill 2021 had declared the telecom sector an industry, but still this sector is not getting the privileges that other industrial sectors are enjoying. The telecom sector is one of the highest-taxed sectors in Pakistan. Cost incurred on obtaining a licence is the single biggest cost the cellular operators have to pay. Though Jazz enjoyed a maximum subscriber base overall over the period 2019-23, it also has witnessed a decline in its subscriber share from 38.8% to 37%. Tariq Baig said that the continuous devaluation of the Pakistani rupee was preventing the telecom sector from providing reliable internet services as the licence fee and interest on instalments were pegged to the US dollar. “The policymakers should address these concerns to help promote digitisation in Pakistan.”

Credit: INP-WealthPk