Telecom Sector’s Contribution to National Exchequer Plunges by Rs. 64 Billion

The tax revenues from the telecom sector have fallen drastically and recorded a decline of Rs. 64.2 billion in just one year. The telecom sector, which contributed Rs. 290 billion in FY 2019-20 as tax revenues, contributed only Rs. 225.8 in FY 2020-21, as revealed by the Pakistan Telecommunication Authority (PTA) in its Annual Report. Its contribution to the national exchequer registered a massive decrease of Rs. 64.2 billion within a year. However, such trends have occurred in the past and are not unusual.   The telecom sector’s contribution to the national exchequer had also fallen from Rs. 169 billion in 2017-18 to Rs. 115 billion in FY 2018-19. The same trend can be observed in investments in the sector. Local telecom investment was $1129.1 million in FY 2019-20, which has decreased to $1094.3 million in FY 2020-21. A glance at the Foreign Direct Investment (FDI) also shows this declining trend in the sector. The FDI in the sector was $763.3 million in FY 2019-20 but stood at $202.3 million in FY 2020-21, which is $561 million less than the preceding year. Many factors, which include the pandemic and heavy taxation in the sector, have contributed to the decrease in investment, according to the PTA. The PTA has initiated Long Distance and International (LDI) and other licenses, and a huge investment is expected this year as TAWAL (a subsidiary of the Saudi Telecom giant STC) and other big players are entering the Pakistani market. The government is also planning to launch 5G in the first quarter of 2023, and incentives will be announced in the upcoming budget. This will bring more investments in the telecom sector, as per the PTA report.