In the recent news, Pakistan’s telecom sector has declared a digital emergency in Pakistan, according to the doomsday scenario, the net profit would turn into a deficit by the end of the ongoing calendar year 2022. The telecom companies would turn from a net profit of $188 million in 2021 to a deficit of $287 million by the end of the calendar years 2022 and 2023 because of the worsening economy.
Digital Emergency in Pakistan is Causing Big Players Liquidity Crunch
Moreover, the largest player in telecom companies has been facing a liquidity crunch of Rs40 billion to pay back piled-up obligations in the wake of higher taxes, interest rate and operational cost, free-falling rupee, payment of license fees in dollars, and inconsistent policies. This was despite making an investment of over $10 billion in Pakistan.
“We have been passing through grave challenges and now it is a matter of our survival. The regulator is not allowing the telecom sector to jack up its rates. The average revenue per user (ARPU) has declined significantly and Pakistan has become the lowest. In such a scenario, the telecom sector is heading towards a doomsday scenario resulting in a digital emergency, and our foreign owners will not allow getting debt for paying obligations and their shareholders,” stated two top representatives of the telecom companies.
Total Revenues of Telecom Companies Have Shrunk in Both Rupee and Dollars
Furthermore, the cost to revenue figure of 74 percent is a projection of above EBITDA cost for 2025 which presently stands at 58 percent. This projection is valid only if no further radical deterioration happens. So, after meeting all obligations on all accounts, the sector has been heading towards a saturation point. The telecom sector’s total revenues both in rupee and dollars have shrunk instead of achieving normal growth as total revenue stood at Rs548 billion in 2016 which now touched Rs644 billion.