Uncertainty Looms Over Pakistan’s Telecom Industry as Dollar-Linked License Fees Threaten Digital Aspirations

Telecom Towers

In pursuit of the government’s ambitious vision to attract $20 billion in investments within the IT sector over the next 2-3 years, the telecom industry emerges as a key player, holding the potential to contribute 25% of Pakistan’s overall IT-related investment goals. However, amidst this promising outlook, the industry faces a critical threat to its survival – the unresolved policy linking telecom license fees to the US dollar.

The significance of the telecom sector’s survival cannot be overstated, as it plays a crucial role in realizing the nation’s digital aspirations. Aamir Ibrahim, CEO of Jazz and Chairman of the Prime Minister’s IT & Digital Economy Advisory Council’s Subcommittee on Telecom, highlighted the sector’s importance, stating that thriving startups, flourishing IT exports, and the overall digital economy heavily rely on the robust broadband connectivity provided by telecom companies.

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Recent statistics shared by Ibrahim underscore the telecom sector’s commitment to Pakistan’s digital transformation. Over the past three years, the industry has invested a substantial $4.8 billion to bolster and expand the nation’s digital highways, laying the groundwork for future growth and progress.

However, looming over this potential for growth is the pressing issue of telecom license fees being linked to the US dollar. The industry has raised concerns about the far-reaching impact of this policy. With the devaluation of the Pakistani rupee, spectrum prices, renewals, and installment interest have all been adversely affected due to the dollar linkage. Over the past two years, forex rates have increased by a staggering 86%, resulting in immense uncertainty and jeopardizing the telecom business case.

Despite persistently urging the government to address this “Digital Emergency,” tangible measures have yet to be taken. The fate of the telecom sector, as the backbone of the digital economy, now hangs in the balance, and its survival is crucial for the nation’s economic growth and digital competitiveness.

While the telecom industry remains willing to invest further in digital infrastructure, the uncertainty surrounding license fees has impeded their ability to secure funds and make substantial commitments. Moreover, this uncertainty has the potential to deter foreign investments, further hindering the growth of the digital economy.

The telecom sector’s plea for urgent action comes at a pivotal moment, with the nation’s digital ambitions on the line. Policy reforms under the recently announced Special Investment Facilitation Council (SIFC) could provide a pathway to address the challenges faced by the telecom industry, fostering a thriving IT sector, prosperous startups, and continued growth in IT exports. Stakeholders, citizens, and industry players are now eagerly awaiting the government’s response, hopeful that the call for action from the telecom sector will be heeded. Together, they aim to pave the way for a robust and resilient digital economy, propelling Pakistan into the digital age with determination and foresight.

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