Cell firms to withdraw SMS offers -Pakistan Press Foundation (PPF)

Paksitan Press Foundtion

Cell firms to withdraw SMS offers

By Zulqernain Tahir

LAHORE: After imposition of 20-paisa tax per SMS, the cellular companies are likely to withdraw their discount packages from July 1.

“It will not be possible for us to continue with the bundle package offers in the wake of fresh tax,” a representative of a cellular company told Dawn on Wednesday.

He said though the government in the federal budget 2009-10 had reduced the general sales tax and SIM activation charges from 21 per cent to 19 per cent and Rs500 to Rs250, respectively, 20-paisa increase on per SMS would not only burden subscribers but also affect the business of such companies that had introduced packages at cheaper rates.”

He said a consumer used to send an average five to seven SMS daily and youth, dumb and deaf were its major `beneficiaries.’ Some companies had started SMS service even in Urdu.

“At the end of the day it will be clear that the government has not provided us with any relief,” an official of another company said.

It is learnt that the cellular companies are joining hands against tax on SMS and will register their protest with the government shortly.

The Pakistan Telecommunication Authority has welcomed the concessions given to the telecom industry.

“We do not see any major impact of SMS tax on the industry. However, we will conduct a study in this regard after a certain period,” PTA chairman Dr Muhammad Yasin told this reporter.

“It will be premature to say that 20-paisa per SMS tax has negative impact on the industry,” he said.

Though the cellular companies are perturbed over the new tax but they can only register their concern with the respective quarters through PTA.

“Unless PTA is convinced that 20-paisa per SMS tax should be reduced the companies are left with only one option — to raise the SMS rates,” said another representative of an operator.

He said the operators would also have to suspend their ongoing ad campaigns in the wake of the new development. “We are now working out new packages and rates,” he said.

The cellular industry had generated a revenue of Rs278 billion in 2007-08.

The previous taxation rate on the cellular services (15 per cent) was already one of the highest in the region.

Owing to stiff competition among the cellular operators in the country, lower tariff had been introduced to attract maximum number of subscribers. Telecom sector, according to PTA, has attracted more than US$5.6 billion foreign direct investment during the last four years.

During 2007-08, the telecom sector attracted a sum of US$1.4 billion foreign direct investment which is about 30 per cent of the total FDI in the country. During 2007-08, the telecom industry ranked second after financial sector as major FDI recipient in Pakistan.

Source: Dawn

Date:6/18/2009