The country’s ambition of a “Digital Pakistan” may develop into a “digital catastrophe,” according to the CEOs of Pakistan’s leading telecom firms, who have issued a warning to the government. PTCL & Ufone’s Hatem Bamatraf, Telenor Pakistan’s Irfan Wahab Khan, and Jazz’s Aamir Ibrahim have all voiced concern about the practise of peg licence costs and interest on instalments to the US currency.
PKR devaluation has jeopardized the business case for telecom companies, as our license fees & interest on instalments are pegged to the US dollar. Last year 50% license renewal fee cost us PKR 44.5 billion, and this year, just 10% instalment alone costs over PKR 13 billion
— Aamir Hafeez Ibrahim (@aamir_ibrahim01) February 2, 2023
As the licence fees and interest are tied to the USD, Aamir Ibrahim noted in a tweet that the devaluation of the Pakistani Rupee (PKR) has harmed the telecom businesses’ capacity to maintain their financial stability. He said that Jazz paid PKR 44.5 billion for 50% of the licence renewal price last year and PKR 13 billion for merely 10% of the instalment this year.
While telecom industry generates its revenue in PKR, spectrum auctions, renewal & instalments are priced in US$ exposing telcos to massive currency devaluation risk. Need to fix this mismatch before telcos capacity to further power digital transformation gets irrevocably depleted
— Irfan Wahab Khan (@irfanwahabkhan) February 2, 2023
The CEO of Telenor Pakistan, Irfan Wahab Khan, stated in a tweet that telecom businesses face a substantial risk of currency depreciation due to the discrepancy between revenue generation in PKR and pricing spectrum auctions, renewals, and instalments in USD.
The ongoing depreciation of the Pakistani rupee (PKR) versus the US dollar has dramatically raised the cost of doing business in the nation, according to Hatem Bamatraf, President and Group CEO of PTCL & Ufone. The idea that telecom companies will make significant investments in modernisation while generating money in Pakistani rupees, he continued, is beginning to harm the vision of a Digital Pakistan.
With constant devaluation of PKR against USD, the cost of doing business has significantly increased in the country. The expectation from Telcos to invest heavily in infrastructure modernization while earning in PKR, is becoming detrimental to the dream of Digital Pakistan.
— Hatem Bamatraf (@ceoptclgroup) February 2, 2023
The CEOs have stressed the necessity of regulatory liberalisation in order to prevent slowing down the nation’s digital development. Due to the uncertainty created by the changing exchange rate, rising interest rates, the cost of fuel and power, and the high and unfair taxes levied on the telecom industry, they have stated that the situation has made business planning impossible.