PTA sees higher revenues from cellular firms -Pakistan Press Foundation (PPF)

Paksitan Press Foundtion

PTA sees higher revenues from cellular firms

KARACHI: The telecom sector is likely to make a higher contribution to the national exchequer in the outgoing fiscal, as compared with the last financial year, Pakistan Telecommunication Authority (PTA) said.

In the first half of the financial year 2011, the total contribution of the telecom sector to the national exchequer was Rs56.3 billion, which was 15 percent higher than around Rs49 billion in the first half of financial year 2010, PTA said in its quarterly report.

PTA said that it had deposited Rs13.56 billion in the FY 2009/10 to the national kitty, while the telecom sector contributed Rs109.05 billion in the form of taxes.

Contribution of telecom sector to national exchequer through taxes, duties and regulatory charges kept growing and almost 50 percent came from General Sales Tax (GST), PTA said.

According to an estimate, telecom sector contributed more than 90 percent share in total taxes by the services sector of Pakistan, which was now being diverted to provinces under the 18th Amendment of the Constitution.

In the first half of financial year 2011, the total GST collection was Rs23 billion as compared with Rs21 billion in the same period of FY 2010.

The GST collection in telecom services mainly came from mobile sector and its share in total GST collection was 86 percent followed by basic services at 11 percent.

The Activation Tax contribution to national exchequer stood at Rs3 billion at the end of first half of FY2011, which was Rs4 billion in the same period last year.

The drop in the activation tax was due to market maturity, PTA said.

The authority suggested the government to abolish this tax on operators to further strengthen the telecom sector growth.

In order to increase GST collection, the government should reduce the existing 19.5 percent rate, so that usage could be enhanced, which would result in higher collection, PTA said.

The PTA report said that in contrast to the economic situation, the growth of telecom sector remained healthy and positive.

The total teledensity growth kept oscillating between highs and lows till the end of year.

Total teledensity including mobile, fixed and WLL services stood at 65.2 percent. The teledensity growth in the first half of the calendar year – January to June 2010 was 0.9 percent whereas in the second half of the year – July to December 2010, it was 1.7 percent. Total teledensity of the country grew by more than 2.67 percent in the last one year, the report said.

The telecom sector has been experiencing decreasing Average Revenue Per User (ARPU) – a measure most often used by telecommunications companies.

In addition to the declining ARPU’s, the telecom sector also faces exorbitant advertisement budgets, power crises, and negative net profits, aggressive competition, market saturation, and decreasing exchange rates. In spite of these challenges the financial health of the sector remained stable, PTAS said.
Source: The News