Telecom sector revenues are likely to touch Rs 600 billion

telesTelecom sector revenues are likely to touch Rs 600 billion in the current financial year 2014-15 with the tremendous surge in consumption of telephony services and 3G/4G technology by customers, including significant savings of the companies on account of operational expenditures.

Economic Survey of Pakistan for 2014-15 revealed that revenues of the telecom sector increased to Rs 299 billion in the first half from July to December 2014. This is first time the sector recorded handsome values of earning historically.

The estimated revenues growth is likely in between Rs 580 billion and Rs 600 billion, which will be more than Rs100 billion from the previous fiscal year of 2013-14, which posted the revenue growth of Rs 465.5 billion.

In 2012-13, the telecom sector posted a growth of Rs 439.5 billion and Rs 409.2 billion in 2011-12, respectively.

On the account of savings of cellular phone sector, their operational cost reduced significantly, as similar to multiple service sectors, including decline in petroleum prices, reduce electricity tariff and Rupee appreciation against Dollar.

Oil prices went down to 34.6 percent from October 2014 to February 2015. The petrol prices go down to around Rs 70.29 per litre from Rs 103.62 per litre whereas diesel prices also declined to Rs 80.61 per liter from Rs 108.34 per litre.

Petrol and diesel are mainly used by the telecom for purpose of transportation of infrastructure, backup fuel supplies to power generators to BTS (cellular sites).

The electricity is the major head of operational expenditure of cellular phone companies which reduced drastically in the past six months subsequently the prices of electricity went down on the lower prices of furnace oil.

For instance, power tariff of all distribution companies were reduced twice by Rs 4.43 per unit and Rs 3.24 per unit in April and February during the period of last six months. Similarly, the power tariff decreased in the city of biggest subscribers base Karachi for customers including commercial sector slashed by Rs7.40 per unit from April 2014 to February 2015 whereas it further reduced the tariff by Rs 1.74 per unit under the head of fuel adjustment.

The survey commented that the availability of 3G and 4G services has enabled development of new applications and data base services, and people of Pakistan are quickly adopting to these new technologies and services. This has resulted in surge in data revenues of cellular mobile industry, reaching Rs. 37.3 billion during July-December, 2014 compared to Rs. 22.1 billion in July-December, 2013, showing an increase of 69 percent.

The Survey forecasted that revenues are expected to further increase in the coming years as more subscribers are added into the 3G and 4G LTE fraternity, generating more data revenues of telecom industry.

The rupee fall sharply against dollar in the closing financial year of 2014-15 and remained stable from the range of 101 to 102 against greenback though in the last financial year 2013-14 it crossed the level of 107 and 110 in the interbank and open markets.

The stability in rupee provided a relief to the cellular operators not only to import their network equipment at controlled rates from different countries, hence companies are exploring new cities at faster pace to launch new generation technologies for their customers. So far, 3G/4G technologies have been launched in more than 100 cities with number of customers crossed the base of 13 million.

Further, the services of the operators were seen improvement without any interruption and shutdown on the ground of controlling law and order issues. The operators continued their services on the events in which service utilities are increased such as two Eids and New Year.

The reduction in operational expenses helped operators repatriate good income or reinvest in to the local market.

The emerging trends of adopting data services by the new customers every day even at higher service charges and the increase in the utility of 3G/4G technologies by existing customers are generating equally handsome revenues for the government’s kitty as well as with the telecom operators.

During the first two quarters of the 2014-15, telecom sector contributed Rs 73.22 billion to the national exchequer in terms of taxes, regulatory fees, initial and annual license fees, activation tax, and other charges.

It could be estimated that the revenues of the government will be doubled to Rs 146.44 with the increase of the earnings of telecom companies in the remaining half of the closing financial year.

Telecom experts said the utility of broadband internet not only create revenue streams for operators and the government but it will contribute positively to the overall economy of the country.

They added that controlled taxes and availability of handsets could enhance the possibility of increasing adaptation of the new technology by the customers, whereas the government should reduce the taxes on telephony along with broadband service and mobile handsets to allow technology role stronger in economic growth.