Cellphone firms seek increase in call rates

Saturday, January 17, 2009

By Jawwad Rizvi

LAHORE: Two major cellular operators of the country have proposed increase in call rates, saying revenues of the telecom industry have been declining which in turn affects investment in the sector.The News has learnt that the proposal was floated in a meeting held at Pakistan Telecommunication Authority (PTA) headquarters on Wednesday, January 14, 2009 in the morning session and continued till lunch time.Chairman PTA, Dr Yasin chaired the meeting, which was attended by the Chief Executive Officers (CEOs) of all cellular operators of Pakistan and member finance to evaluate the financial situation of the cellular industry.Sources privy to the meeting revealed that various issues of the telecom industry were discussed in the meeting. The meeting also talked about the impact of the current global financial crunch and national issues for the telecom industry.Cellular operators’ representatives stated that their revenue had registered a declining trend. Representatives of the two operators, of which one has the country’s largest customer base and the other is a sister organisation of the national telecommunication company, had proposed to increase call rates in order to attract further investments and maintain the quality of their services.They said the sector had received the highest Foreign Direct Investment (FDI) during the last couple of years and in the current scenario no further investments are expected.Cellular operators said the revenue of the telecom industry dropped due to an increase in taxes. The Average Revenue Per User (ARPU) has been reduced to $2.7 per consumer, as compared to last year’s $4 per consumer in the same period. They proposed the burden should be shifted on to the consumers by increasing call rates.Of the two operators’ representatives, one is based in China while the other is UAE-based. The UAE-based representative opposed the idea of increasing call rates, saying that it would reduce the consumer base. They also opposed the idea as the customers are already affected with the current high tax rates and imposition of new 5 per cent surcharge on every easy load has also put extra burden on the customers. They said the ARPU was declining due to many other reasons, not only due to taxes. On the other hand the Norway based cellular operator representative remained indifferent to this issue.A spokesman of the sister organisation of National Telecommunication Company confirmed to The News that the meeting of all mobile company CEO’s, PTA Chairman, Member Finance PTA. However, he said that the meeting was not for increasing mobile tariffs, but rather to evaluate the financial situation of the cellular industry in the country. He said various suggestions were discussed for the betterment of the industry and consumers. This meeting was called in by the PTA.Other issues which were also discussed in the meeting included UAN, SMS interconnection, infrastructure sharing. The meeting also discussed different competitive and aggressive call rates. It mentioned that the telecom industry was still in its growing phase, although the pace of growth was slower compared to previous years. This is understandable given the global financial crisis, rising costs in Pakistan, as well as the maturity phase, which the industry is now experiencing.

Published in The News Business pages