Telcos Propose 5G Tax Breaks in Budget 2023-24

Hi everyone! I hope you are all doing well. Welcome back to another blog. This article will discuss “Telcos Propose 5G Tax Breaks in Budget 2023-24”. Telecom operators in Pakistan have suggested that the government consider a new approach to generate revenue from 5G development, rather than relying on spectrum fees and taxes. They believe that the return on investments could become a major challenge for the 5G launch in the country due to the high capital and operational expenses involved.

Telecom operators have suggested tax exemptions for spectrum fees and local handset production requests. Additionally, they stated that the implementation of a streamlined process for Right of Way (ROW) decisions is becoming necessary in Pakistan.

International arrival of 5G, including South Asia; Pakistan to launch soon. The matter was discussed in a workshop by South Asian Telecommunication Regulators’ Council (SATRC) on Policy, Regulation, and Services (PRS) held in Pakistan.

During a presentation, a representative from a telecom operator emphasized the importance of spectrum harmonization as a key step for the SATRC body. They highlighted that this measure is crucial to prevent problems and conflicts similar to those occurring in the Gulf region.

The sub-committee on spectrum harmonization plays a crucial role because radio waves can propagate beyond borders. It is important for all countries in SATRC to have consistent regulatory and technical rules. These rules should cover synchronization techniques, frame, and sub-frame configurations, as well as starting and ending frequencies of bands. Additionally, it is necessary to address the issue of vacant bands and understand why they are not being utilized.

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The member countries of SATRC have either conducted auctions or finalized the bands for the 5G spectrum. Bangladesh and India have auctioned the 5G spectrum, although they are currently utilizing it for 4G technology. Maldives and Iran have limited coverage of 5G. Nepal and Sri Lanka are currently in the trial phase of implementing 5G.

Industry stakeholders and senior government officials are considering it nearly impossible, while some believe that launching 5G by the end of December 2023 is challenging due to the overall economic situation in the country and the state of the telecom market.

The Authority also faces various challenges and obstacles in launching 5G services in the country. These include limited availability of handsets and optic fiber cables (OFC), inflationary pressures, low average revenue per user (ARPU), rising operating expenses (OPEX), and high taxation.

Firstly, the low adoption of 5G handsets in the Pakistani market is a significant obstacle. Less than one percent of the handsets in the country support 5G technology. The Authority stated that while many developed countries have already implemented 5G, Pakistan faces various challenges in providing such services.

Several factors may have a potential impact on the launch of 5G. These include low penetration of OFC (optical fiber cables), limited use cases, fewer towers in densely populated areas, rising inflation, low average revenue per user (ARPU), increased operating expenses like fuel and electricity prices, and high taxation.

By the end of 2026, it is projected internationally that 5G will have around 3.5 billion subscriptions. This would account for approximately 45 percent of the total mobile traffic data worldwide.

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The Authority emphasized that Pakistan must embrace the introduction of 5G to stay in line with regional advancements. Before the government issues a comprehensive 5G policy, it needs to tackle the existing challenges.


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