Pakistan’s telecom sector is facing a lot of pressure because of its low mobile data prices despite rising network costs, new spectrum payments and 5G.
Pakistan is one of the world’s lowest-revenue telecom markets. Mobile users currently pay about Rs. 29 per GB of data, while average revenue per user (ARPU) is estimated at only around $1 per month.
At the same time, data consumption continues to increase, requiring operators to spend more on network capacity.
The pressure is expected to intensify following Pakistan’s latest spectrum auction. Telecom operators are collectively expected to pay at least $510 million for newly acquired spectrum, with 50 percent of the amount due next year.
Each operator could also need to upgrade more than 1,000 mobile sites annually to prepare networks for 5G.
Network operating costs have also increased, with energy, imported equipment, freight and insurance becoming more expensive. International oil prices have added further pressure.
Telecom operators already spend an estimated 15% to 20% of annual revenue on network expansion and modernization. However, data traffic and infrastructure requirements are now increasing faster than the revenue generated.
The changing cost structure has also renewed attention on Pakistan’s telecom tariff framework.
Under the current system, operators classified by the Pakistan Telecommunication Authority (PTA) as having Significant Market Power need regulatory approval before increasing retail tariffs.
The sector has changed significantly since the framework was introduced. The transition to 5G is also raising operators’ investment needs.
Greater pricing flexibility would not necessarily mean eliminating regulatory oversight. For Pakistan, the key challenge is finding a balance between affordable connectivity and sustainable telecom investment.
Gradual tariff rationalization could become part of that process, but this would need to account for consumer purchasing power, market competition and adequate protections for users.
Pakistan has made mobile data highly affordable. The new challenge is ensuring that telecom operators generate enough revenue to maintain network quality and transition to 5G without making services unaffordable.
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