Apr 9th

 

Pakistan’s cellular telecom industry has lived with a dream that it can sustain its growth that it has witnessed in the last couple of years and so do the government and its institution that they can continue to earn revenue out of the industry.

 

But “Perception” and “Reality” are two words, which most people understand but somehow cannot differentiate between the two; therefore sometimes perception becomes more stronger and takes over reality putting oneself in a situation where “reality becomes perception”.

 

Similarly is the case with our telecom sector we have this perception that telecom industry in Pakistan is growing strongly and therefore wherever there is shortfall revenue government institutions look for industries that can be taxed heavily. The fact that most cellular companies have not yet turned profitable barring one or two is completely lost.

 

Telecom industry is the second largest industry in our country and at this time is the cash cow for the government as the revenue from this sector is highest? The excise duty on the cellular users is the highest in the region. The corporate income tax that is levied on the turnover of the companies is also significantly high and is even paid by the companies that run into a loss.

 

It is essential to mention here that the telecom industry is the one of the largest contributor of Foreign Direct Investment (USD 908 million in the year 2009-10) and almost 5% of the GDP of the country is produced by the industry.

 

The telecom industry has revolutionized the way we do things and has allowed everyone from every class in the economy to stay in touch all the time. But it seems evident that the reason behind the industry not going a step further to 3G technology has a lot to do with the growing issues each company has to face to keep their network working. Even though Pakistan is one of the fastest growing telecom industry’s in the world we lag in terms of the technology advancement. Over the last few months there has been great talk about the introduction of 3G technology but how would that be possible when they are so many unseen costs involved other than just the license fee and network cost.

 

The cellular operators need to wake up and understand that the years of unimpeded growth in customer base may be soon over and the government must also realize that expanding the tax base is a better option than to squeeze more out of the industries that are already heavily taxed. If telecom sectors growth is stalled either in terms of network expansion, new technology introduction or profitability the over all performance of services sector and GDP itself will suffer.

 

 

By: Sitara Khan



This syndicated post originally appeared at on 9 April 2011