New Delhi, May 20 (IANS) Pakistan’s telecom sector is facing investment pressure amid a high tax burden that is impacting its capacity to expand and upgrade digital infrastructure, a report has said.
A report published in Business Recorder highlighted that the federal budget approaches and questions are being raised over whether current taxation policy is aligned with Pakistan’s ambition to build a competitive and inclusive digital economy.
The telecom sector, which underpins financial inclusion, e-commerce, digital governance and IT exports, has contributed more than PKR 2.5 trillion in taxes and levies over the past decade, it said.
According to Pakistan Telecommunication Authority (PTA) data, operators contribute between 35 per cent and over 40 per cent of revenues annually through taxes, levies and regulatory payments.
When broader value chain contributions are included, an analysis of a major operator over 2019–2025 suggests nearly half of total revenues are ultimately transferred to the state on a fully loaded basis.
Moreover, the sector faces continuous investment demands for network expansion and upgrades, creating strain between fiscal contributions and capital expenditure needs, the report said.
In addition, mobile users in Pakistan face a combined tax burden of around 33–35 per cent on prepaid services, placing telecom among the most heavily taxed consumer sectors, it added.
Average revenue per user remains close to $1, among the lowest globally.
The report showed that this is affecting affordability and access, particularly for low-income users, many of whom continue to pay advance withholding taxes on mobile usage.
However, Pakistan’s usage gap also remains wide, with around 81 per cent mobile broadband coverage but nearly 40 per cent of users not actively using mobile internet.
Additionally, the sector is entering a capital-intensive phase, with recent spectrum auctions requiring over $500 million in commitments, alongside planned investments in 5G rollout and annual reinvestment of 15–20 per cent of revenues.
–IANS
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