Strong data revenue growth is the silver lining of Pakistan’s ailing mobile sector

Between falling mobile revenue, rock-bottom foreign investment, and hikes in sales tax on devices, Pakistan’s mobile operators have had a fairly bleak year.

However, amid all the misery is some good news, as data revenue growth has been very strong. The State Bank of Pakistan has reported that for the second half of 2015 there has been a 69% increase in data revenue growth compared to the same period last year.

While the bank’s report did not provide exact figures, it did note that the trend is set to continue into the second half of the current fiscal year, which ends on June 30th. Continuing the positive trend, penetration and usage of mobile data is also on the rise with around 1 million mobile users adopting 3G and 4G services each month since they became commercially available.

Although operators are now beginning to see some return on their investment in 3G and 4G services, a recent report commissioned by the PTA (Pakistan Telecommunication Authority) asserted that there should be no further spectrum auctions for at least another year.

The first 3 months of 2015 saw over 10 million new 3G connections across the country’s top 4 operators, which between them cover 94% of Pakistan’s subscribers. Of these, 3.1 million joined market leader Mobilink while 3.3 million opted for number two Telenor. China Mobile-backed Zong, which is the country’s only 4G provider, has around 200,000 4G customers.

However, across the third quarter operator revenue fell by 12% on the previous quarter to PKR102 billion ($98 million), with mobile revenue falling by 1.8% over the last fiscal year. Adding to these woes, the federal government doubled sales tax on certain imported mobile devices; margins and ROI remain low while economic growth is sluggish.

Direct foreign investment has plummeted by 72% compared to the previous fiscal year. This has been accredited to the vast investment from the operators’ parent firms to acquire licences for 3G and 4G spectrum.

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