Communications Sector Sees Significant FDI Outflows in FY23

The communications sector underwent significant gross FDI outflows due to a high corporate taxation environment and lower average revenue per user (ARPU) that affected the earning prospects of telecom companies, says the State Bank of Pakistan (SB). The Bank in its “Annual Report 2022-2023: The State of Pakistan’s Economy”, noted that the country has an ARPU of $0.80 per month, compared to the global average of $8.26 per month. The majority of the outflows from the communications sector were to Norway during fiscal year 2023, followed by the UAE, Malaysia, and China. In the non-manufacturing sector, the telecom sector availed fixed investment loans amounting to Rs. 48.3 billion during FY23, compared to an off-take of Rs. 95.4 billion last year. A major telecom firm availed syndicate financing for injecting equity into its wholly-owned subsidiary, besides capacity expansion. A sector-wise analysis shows that the drop in profit repatriation was led by financial firms, followed by communication (particularly telecom), power (especially thermal power), and the food sectors.