Economics & Business

Telecom sector adds over RS13 BN to national exchequer despite tight economic situation

Karachi: Pakistan Telecommunication Authority (PTA) has deposited Rs13.56 billion to the national exchequer during the current fiscal year (2010-11), according to the Quarterly Report 2011 issued here by PTA. The reports said that the telecom sector also contributed a hefty amount of Rs109.05 billion in the form of different taxes.

During the year under review, the contribution of telecom sector, the report highlights, to national exchequer through taxes, duties and regulatory charges kept growing. At the end of FY2010 the total contribution was over Rs109 billion, of which almost 50 per cent came from GST.

In the first half of the FY2011 the total contribution to national exchequer was Rs56.3 billion which was almost Rs49 billion in the first half of FY2010 showing, growth of 15 per cent since 2009-10. It is, therefore, expected that by end of the FY2011 the total contribution to national exchequer would be higher than the last year’s contribution, the reports said.

According to an estimate, the telecom sector accounts for more than 90 per cent share in total taxes by the services sector of Pakistan, which is now being diverted to provinces under 18th Amendment. Similarly, share of GST in total contribution from telecom sector is also very impressive where almost 50 per cent of total contribution comes from GST collection.
Only in the 1st half of FY 2010-11, total GST collection is around Rs23 billion which was Rs21 billion in the same period last year.

GST collection in telecom services mainly comes from mobile sector and its share in total GST collection is 86 per cent, followed by basic services as 11 per cent. The Activation Tax contribution to national exchequer stood at Rs3 billion at till end of 1st half of FY2010-11, which was Rs4 billion in the same period last year.

Main reason, the reports points out, for drop in the activation tax is due to market maturity. It is time for the government to abolish this tax levied on operators, so as to further strengthen its growth. Whereas, in order to increase GST the government needs to reduce the existing 19.5 per cent rate. So that usage could be enhanced, which would result in increase in GST collection, the report proposes.

Report says that despite tight economic situation in the country this year, the telecom sector showed robust growth this year. The total tele-density growth kept oscillating between highs and lows till the end of year, the report concluded.

According to the PTA’s report, total tele-density including mobile, fixed and WLL services stood at 65.2 per cent. The tele-density growth in the first half of the year (Jan to June 10) was 0.9 per cent, whereas in the second half of the year (July-Dec10) the growth was 1.7 per cent, showing more stability and resilience as compared to 1st half of the year. Total tele-density of the country grew by more than 2.67 per cent in the last one year.

The PTA report further pointed out that the even though the telecom sector is experiencing decreasing ARPU’s, exorbitant advertisement budgets, power crises, and negative net profits, aggressive competition, market saturation and falling exchange rates, the financial health of the sector remained stable.

Telecom regulator continued to facilitate the sector on regulatory issues and maintaining competition in the sector. In this regard, PTA has taken many initiatives and launches National Rabta Information Portal, survey to check power level of mobile Towers, billing verification of Mobile Operators, Curbing the menace of illegal traffic, introduced online complaint Management System, and other Consumer friendly initiatives taken by PTA, the report said.

About the author

Saleem Shaikh

The writer is a development journalist. He writes on water, sanitation, environment, climate change, agriculture, women development, human rights, education, health, development budgets and economy.

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  • I wana say that PTA is working very nicely ,but it should keep ensure that all the tele communication companies should improve their services more as the technology is moving day by day….