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Reserves and curtail the import bill, which swelled due to unprecedented high oil prices. To curtail the mobile handsets imports, the Government imposed custom duty and regulatory duty together @ Rs. 750 per mobile handset. Resultantly, the imports of cellular mobile handsets declined by 66% in 2008-09, falling from the previous year's US$ 446 million to only US$ 130 million. Although, the total telecom imports in the year 2008-09 grew by more than 20% reaching to US$ 1.7 billion in 2008-09 compared to 1.3 billion in 2007-08. This indicates that competitive environment has forced all the operators to import machinery and equipment to expand their infrastructure.

In the fiscal year 2009-10, the government has extended support to mobile handsets imports while reducing the custom duty from Rs. 500 to Rs. 250 per mobile handset and abolishing the regulatory duty @ Rs. 250. This step is likely to give impetus to the mobile industry by ensuring provision of mobile handsets at cheap rates, besides checking smuggling of mobile handsets, which is inflicting a serious loss to the Government revenue.

Telecom Revenues

The telecom sector revenue showed a 19.8% growth during 2008-09 compared to 18.2% in previous year. During the year 2008-09, the telecom sector generated revenue to the tune of Rs. 333.9 bn compared to the last year's Rs. 278.5 billion. The cellular mobile sector continued to be the leader in telecom revenue, whose share came out to be 64% in the total telecom revenues. The cellular mobile sector showed about 17% positive growth during the fiscal year 2008-09.

Market Overview

Pakistan mobile market hosts some of the world’s largest and most experienced telecom companies including Orascom, Telenor (Norway), Warid Telecom (Abu Dhabi Group), China Mobile and Etisalat, a UAE based company. These companies have heavily invested in Pakistan to lay down the infrastructure and take mobile services to every nook and corner of the country. With the encouragement of Government of Pakistan and best efforts by the regulator as well as the determined mobile operators, the sector has recovered from slow growth of past few months. Nonetheless, there is escalation in mobile penetration up to 57.4%, as the total mobile subscribers have reached to 94.3 million, with more than 90% of the country having mobile service access.

The reported year [2008-09] did not come out to be an exciting one as the financial strength remained invariable with revenues growing only by 16% and investments dropped by 48%. The industry could not halt the falling ARPUs that are standing at US$ 2.5, showing a drop of 20% from that of the last year. Although companies like Telenor and Ufone kept on investing more than their competitors, but to keep ARPUs constant is still a challenge for all the operators. Out of all the 5 mobile operators, only Ufone registered profit of Rs. 1.7 billion during 2008-09, and the rest of the companies recorded financial burden due to heavy running expenses including power expenses, rupee depreciations and employees' emoluments etc. For the first time ever, job cuts had also been announced by the operators.

The stakeholders [regulator, operators etc.], however, have taken several measures, which may help the sector regain health in the coming years. On a request by the PTA, the government, in the current budget,