Telecom sector’s outflows reach $390.9m
By: Mehtab Haider
ISLAMABAD: Pakistan’s telecom sector has witnessed net outflows of $390.9 million in the outgoing financial year, official sources told the News on MondayExperts said that puts a big question mark on the the PML-N government’s plan to auction Third Generation (3G) technology to fetch around $1 billion in licence fees.
The raising of these funds is seen as crucial in helping the government combat the circular debt issue and thus the energy crisis – as well as loan rescheduling with the IMF.But telecom sector players are offloading their shares, making it hard for the government to reverse this trend in the next financial year by attracting increased overall investment of over $1 billion, the officials said.
“For reversing this trend from outflow to inflow in terms of the foreign direct investment (FDI), the government will have to come up with a comprehensive package to achieve success in 3G auction,” the officials said.
The government has initiated appointing members in the Pakistan Telecommunication Authority (PTA) on merit basis and this process will be completed by the middle of July after which the process of auctioning 3G licence will be resumed, they said.
The PPP-led regime had failed to auction 3G licence in its five years rule, mainly because of efforts to bypass the Public Procurement Regulatory Authority (PPRA) rules and adopting controversial procedures to appoint consultants – which resulted in infighting among members and the PTA chairman.
During last 23 months, instead of witnessing any net inflows, the telecom sector registered outflows of $733 million. There are telecom players, which are offloading their shares in the domestic market, resulting in major outflows during the last two years, the officials said.
“In May alone, the telecom sector registered net outflow of $55 million FDI,” the officials said, while quoting data of the State Bank of Pakistan (SBP).In July-May period, the inflows in terms of FDI stood at $157 million, while outflows stood at $547.5 million, indicating net outflows of $390.9 million.
In the same period of the last financial year, the FDI inflows were $146.7 million, while outflows stood at $490.5 million, making the net outflows to be $343.8 million.
Overall, the net FDI in all sectors of the economy attracted $1.318 billion during the first 11 months of the outgoing fiscal year against $764 million in the same period last fiscal year.