Speaking at the Telecommunications Authority of Pakistan Consumer Conference 2022, Mudassar Hussain, Vice President of Public Policy and Regulatory Affairs at Jazz, said Pakistan’s telecom sector is currently experiencing its toughest moments. difficult due to an exponential increase in the cost of doing business, with a steady increase in US dollar spectrum. installments being one of the major contributing factors.
He added that the government’s choice to tie the price of spectrum to the US currency rather than the rupee was a pressing issue for local mobile cellular operators and the financial health of the industry, as it had not been resolved in previous spectrum auction policies and license renewals. The unsustainable situation has now plunged the country into a digital emergency.
“Customers are charged in rupees for cellular mobile operations. Revenues are also made in rupees, which are reinvested by operators to cover the majority of expenses, such as spectrum prices and equipment imports in dollars. Denominating spectrum costs in dollars exposes operators to significant risk of currency depreciation. »he stated.
Likewise, with each passing year, annual spectrum license payments become more unpredictable. This prevents operators from planning their future investments in networks, services and spectrum.
He went on to say that the ongoing devaluation of the Rupee had exacerbated an already exorbitant license/spectrum renewal price for mobile operators and that industry players faced a double bind under such difficult economic conditions in the country, where USD spectrum prices had risen alongside the devaluation of the PKR.
Although the increase in spectrum prices for individual frequency bands may not seem significant in dollar terms over the years, when considered as an aggregate set of frequencies in a license, prices have increased significantly, even in U.S. dollars. Consider the 2019 renewal price of $450 million for Telenor, Warid and Zong’s 291 million licenses awarded in 2004.
Also, due to the depreciation of the local currency, there has been a huge increase in rupees. For example, between 2007 and 2022, the cost of 1 MHz spectrum in the 1800 band increased from US$21 million to US$31 million, a 388% increase in terms of 1.27 rupees billion to 6.65 billion.
He said that under the proposed emergency stimulus package, the industry demanded immediate policy intervention such as spreading license payments over ten annual installments instead of five and naming spectrum payments as rupees, which would provide operators with much-needed fiscal space and allow them to continue serving more than 195 million subscribers.
During his speech, he also acknowledged the collaboration of the telecommunications industry with the Telecommunications Authority of Pakistan and the Ministry of Information Technology and Telecommunications to help alleviate the current challenges, ensure constant improvement quality of services and support Pakistan’s digital inclusion goals.