PTA to Charge Telcos for Revenues Made Through Financial Services

The Pakistan Telecommunication Authority (PTA) is asking mobile phone operators to pay the yearly regulatory fee for the revenues they make through their partners (financial institutions) in providing mobile financial services. According to an order seen by ProPakistani, PTA has asked operators to furnish the regulator with the transactional details for their mobile financial services (MFS) operations and any monetary outcomes, so it may impose the operators the agreed annual regulatory fee. Earlier telcos rejected PTA’s claim for a fee, saying that since MFS services don’t fall under licensed services hence any annual fee should not be levied. It is pertinent to mention here that all mobile phone operators are liable to pay 1.5 percent of their gross annual revenue to Universal Service Fund, while another 0.5 percent of their gross annual revenue goes towards R&D Fund as an annual license fee. Telcos had contested that since mobile financial services do not fall under licensed services, hence this 1.5 percent and another 0.5 percent yearly contribution should not be applicable for mobile banking services. However, in an order, PTA rejected the plea of telcos. The regulator, after undergoing several hearings and consultation processes, has determined that MFS services that telcos provide through their partners will be levied like other licensed services (such as telephony, internet, VAS, etc.). PTA, in its order, said that since mobile phone operators provide the necessary connectivity and technical assistance to their partner financial institutions (usually banks, EMIs, and microfinance banks), revenues coming from mobile banking services will be levied like other licensed services and has asked mobile phone operators the transactional details for their mobile banking operations. The annual levy of MFS services could be in billions of rupees per year. It won’t be out of place to mention here that telcos had already exhausted their option of challenging this order in court since the Islamabad High Court dismissed a petition from telcos that demanded relief from the annual levy on MFS.