According to information in the report ,it is encouraging to see that industry revenues increased by almost 7% annually to Rs 694 billion in 2021–22.
Despite all the odds, the Pakistan Telecommunication Authority (PTA ) annual telecom industry report suggests that FY22 was a job well done. According to information in the report ,it is encouraging to see that industry revenues increased by almost 7% annually to Rs 694 billion in 2021–22.
Within that pie, mobile network operators saw a slightly higher growth of 8% y/y to Rs 500 billion, fixed-line operators grew their cumulative topline by 12% y/y to Rs 90 billion, and LDI operators saw a 12% revenue decline to Rs 40 billion.
However, after accounting for inflation (the CPI averaged 12.15% in FY22), the industry’s topline growth last fiscal year was negative in real terms. This highlights the difficulties operators face in monetizing a subscriber base whose weak purchasing power makes communication-related spending price-sensitive while also increasing year over year.
It makes sense why the primary measure of average revenue per user (ARPU), according to the PTA report, remained at the same level in rupee terms (Rs 220 per month) in FY22 as it did in FY18.
The expansion of high-speed mobile broadband (especially 4G) services is crucial. Despite the fact that there are currently 124 million subscribers to mobile broadband (3G and 4G combined), the penetration rate of 56 percent is not impressive given that it has been almost ten years since these “next-generation mobile services” were first made available in Pakistan.
The number of unique mobile broadband subscriptions comes to 93 million, or 42 percent penetration, assuming that every third subscriber is using two Sims (a phenomenon known as the multiple-Sim phenomenon).
The PTA annual report notes that the industry’s contribution to the national exchequer surged by 44% year-on-year to reach Rs325 billion, an increase of almost Rs100 billion.
This was mainly due to the collection of spectrum-auction-related fees and license-renewal-related payments from the concerned MNOs. Overall investment in the industry reached $2.07 billion in FY22, a 55% increase from FY21. However, net foreign direct investment (FDI) was negative $29 million, down from $35 million in FY21.
In contrast to any significant increase in core capital expenditures (excluding spectrum and license fees) for network expansion, the increase in overall industry investment is more due to the fact that a spectrum auction took place in FY22 (for which the operator arranged the payment through local sources).
According to some MNOs’ most recent financial reports, core capex has actually decreased by a double-digit percentage through the majority of 2022.
In the report, it is stated that 30 companies were engaged in this industry as of September 2022, resulting in the creation of 26,000 jobs and the assembly of 17 million handsets, 43% of which were 4G smartphones.
The macroeconomic fundamentals must improve in order to increase 4G phone assembly. Due to macroeconomic headwinds and the government’s fiscal challenges, service providers and users are having it tough.
The regulator does not have much power or room to ease the burden on telcos or users, but it is hoped that these challenges won’t make it commonplace to experience service interruptions or degradation.