Why have foreign telecom players chosen to exit Pakistan?

[RescueRanger]

Qatar Telecom and Oman Telecom preferred to go away from the Pakistani market mainly because of the flawed regulatory regime​

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By Mehtab Haider
December 23, 2023

ISLAMABAD: Different telecom players are preferring to leave Pakistan, including a recent episode when Telenor Pakistan sold out its 100 stakes to the PTCL.

It seems something has gone fundamentally wrong, which is compelling them to wind up their operations in this part of the world.

This scribe conducted background discussions with certain experts in the telecom sector, who threw light on the overall prevailing business environment, resulting in their exit from Pakistan.

“It is a business venture that cannot be run on the basis of charity. A viable business is aimed at earning profits, and when it shrinks, then business will not stay at any such place,” a telecom expert said

He added that recently it was communicated that Telenor was exiting the Pakistan market, but reminded that a few years back, Warid had exited from the market as well.

He reminded that Qatar Telecom and Oman Telecom invested in World Call and Witribe, but both preferred to go away from the Pakistani market mainly because of the flawed regulatory regime as the government was not even willing to give them frequencies even on payment/ auction of frequencies in dollars, etc.

Another expert stated that Telenor’s repeated warnings and concerns about the formidable challenges in the sector’s business environment remained unaddressed, compelling it to wind up its operations from here.

Highlighting the regulatory risk exposure, Telenor Group, in its Annual Report 2022, noted that its Pakistan unit continues to be subject to arbitrary assessments and unpredictable application of tax regulations. Just last year, the Federal Board of Revenue (FBR) froze the bank accounts of Telenor Pakistan, citing a disputed tax claim amounting to around Rs3.5 billion, which the company challenged and later was granted a stay order.

Two years ago, the Inland Revenue Department, AJK, sealed multiple Telenor Pakistan network sites over a disputed tax demand, resulting in service disruption to most of the population of AJK.

Later, Telenor Pakistan was served a penalty of PKR 50 million by the Pakistan Telecommunication Authority due to service breakdown.

Telenor Pakistan, later, responded that the services were not shut down by the company; in fact, they were forced out of the company-operated towers and offices. Reportedly, no notice period was provided to Telenor to inform its subscribers of the service closure in advance.

In the second quarter of 2022, shares in Telenor ASA dropped after Norway’s biggest telecommunications company posted a $250 million impairment on its Pakistan operations due to a jump in funding costs and an adverse court ruling on license renewals.

“There has been a significant increase in interest rates, country risk premium, and market premiums, impacting the weighted average cost of capital,” the company said in its second-quarter report. “This, together with a hike in energy prices and increased global inflation, has made the outlook for Telenor Pakistan challenging.”

Among Telenor Group’s seven markets, Pakistan was the only country where it reported a heavy loss of Norwegian Krone 2,862 million last year, owing to a high cost of business, primarily high energy costs, interest rate hikes, and dollar-denominated spectrum instalments.

On the other hand, Pakistan also enacted an increase in its corporate income tax from 29 per cent to 33pc in 2022, which now reached an aggregated all-time high of 39pc.

Further underscoring risks and uncertainties in the latest quarterly report, the Telenor Group noted that its Asian markets, particularly Pakistan, are experiencing a deterioration of the political and economic situation. This may increase the risk of civil unrest, security concerns, and financial instability. The report further said that the macroeconomic outlook for Pakistan remains challenging and its entity is still sensitive to impairment.

Over the years, Telenor Pakistan, alongside other telecom companies, has actively advocated for policy interventions across various platforms to enhance the industry’s health and safeguard the viability of operations. Unfortunately, governments and policymakers have not heeded the industry’s warnings regarding an impending digital emergency, resulting in the departure of one of the most well-organised telecom groups globally — Telenor.

This sentiment is echoed by industry analysts who find Telenor’s exit not as a natural market consolidation or reorganisation, but as a consequence of a policy environment failure that compelled a hasty departure. This situation warrants a thorough and immediate introspection to help address the digital emergency.
First published: https://www.thenews.com.pk/print/1141003-why-have-foreign-telecom-players-chosen-to-exit-pakistan
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@Olympus81 @_NOBODY_ if you recall this is what I was mentioning was going happen in the last forum prior to elections due to excessive taxation and restrictions by GOP.

 

[Dalit]

That only leaves local companies to serve the customers? A pathetic state of affairs.

 

[RescueRanger]

That only leaves local companies to serve the customers? A pathetic state of affairs.

I remember the days of PAKTEL and I can tell you on good authority that a certain few individuals are behind this misstep, ask yourself which telco operator stands the most to gain from the exit of competition, there will exist a duopoly in Pakistan if this continues and one which will benefit two companies in particular.

A very good friend of mine who was former C-Suite at Telenor Pakistan recalled this debacle to me prior to "quitting" Pakistan for good and moving to Dubai.

 

[Ali_Baba]

Qatar Telecom and Oman Telecom preferred to go away from the Pakistani market mainly because of the flawed regulatory regime​

---

By Mehtab Haider
December 23, 2023

ISLAMABAD: Different telecom players are preferring to leave Pakistan, including a recent episode when Telenor Pakistan sold out its 100 stakes to the PTCL.

It seems something has gone fundamentally wrong, which is compelling them to wind up their operations in this part of the world.

This scribe conducted background discussions with certain experts in the telecom sector, who threw light on the overall prevailing business environment, resulting in their exit from Pakistan.

“It is a business venture that cannot be run on the basis of charity. A viable business is aimed at earning profits, and when it shrinks, then business will not stay at any such place,” a telecom expert said

He added that recently it was communicated that Telenor was exiting the Pakistan market, but reminded that a few years back, Warid had exited from the market as well.

He reminded that Qatar Telecom and Oman Telecom invested in World Call and Witribe, but both preferred to go away from the Pakistani market mainly because of the flawed regulatory regime as the government was not even willing to give them frequencies even on payment/ auction of frequencies in dollars, etc.

Another expert stated that Telenor’s repeated warnings and concerns about the formidable challenges in the sector’s business environment remained unaddressed, compelling it to wind up its operations from here.

Highlighting the regulatory risk exposure, Telenor Group, in its Annual Report 2022, noted that its Pakistan unit continues to be subject to arbitrary assessments and unpredictable application of tax regulations. Just last year, the Federal Board of Revenue (FBR) froze the bank accounts of Telenor Pakistan, citing a disputed tax claim amounting to around Rs3.5 billion, which the company challenged and later was granted a stay order.

Two years ago, the Inland Revenue Department, AJK, sealed multiple Telenor Pakistan network sites over a disputed tax demand, resulting in service disruption to most of the population of AJK.

Later, Telenor Pakistan was served a penalty of PKR 50 million by the Pakistan Telecommunication Authority due to service breakdown.

Telenor Pakistan, later, responded that the services were not shut down by the company; in fact, they were forced out of the company-operated towers and offices. Reportedly, no notice period was provided to Telenor to inform its subscribers of the service closure in advance.

In the second quarter of 2022, shares in Telenor ASA dropped after Norway’s biggest telecommunications company posted a $250 million impairment on its Pakistan operations due to a jump in funding costs and an adverse court ruling on license renewals.

“There has been a significant increase in interest rates, country risk premium, and market premiums, impacting the weighted average cost of capital,” the company said in its second-quarter report. “This, together with a hike in energy prices and increased global inflation, has made the outlook for Telenor Pakistan challenging.”

Among Telenor Group’s seven markets, Pakistan was the only country where it reported a heavy loss of Norwegian Krone 2,862 million last year, owing to a high cost of business, primarily high energy costs, interest rate hikes, and dollar-denominated spectrum instalments.

On the other hand, Pakistan also enacted an increase in its corporate income tax from 29 per cent to 33pc in 2022, which now reached an aggregated all-time high of 39pc.

Further underscoring risks and uncertainties in the latest quarterly report, the Telenor Group noted that its Asian markets, particularly Pakistan, are experiencing a deterioration of the political and economic situation. This may increase the risk of civil unrest, security concerns, and financial instability. The report further said that the macroeconomic outlook for Pakistan remains challenging and its entity is still sensitive to impairment.

Over the years, Telenor Pakistan, alongside other telecom companies, has actively advocated for policy interventions across various platforms to enhance the industry’s health and safeguard the viability of operations. Unfortunately, governments and policymakers have not heeded the industry’s warnings regarding an impending digital emergency, resulting in the departure of one of the most well-organised telecom groups globally — Telenor.

This sentiment is echoed by industry analysts who find Telenor’s exit not as a natural market consolidation or reorganisation, but as a consequence of a policy environment failure that compelled a hasty departure. This situation warrants a thorough and immediate introspection to help address the digital emergency.
First published: https://www.thenews.com.pk/print/1141003-why-have-foreign-telecom-players-chosen-to-exit-pakistan
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@Olympus81 @_NOBODY_ if you recall this is what I was mentioning was going happen in the last forum prior to elections due to excessive taxation and restrictions by GOP.

Reads like the perfect description of a state thast is a bannana republic with NO RULE OF LAW or ANY ACCOUNTABILITY.

This is the real problem Pakistan faces in trying to attract "Foreign investment". No on wants to because it is rule of the jungle in Pakistan with degradation in the legal framework that is required to protect investments.

The following is a perfect description of a mafia state in its operations !

Highlighting the regulatory risk exposure, Telenor Group, in its Annual Report 2022, noted that its Pakistan unit continues to be subject to arbitrary assessments and unpredictable application of tax regulations. Just last year, the Federal Board of Revenue (FBR) froze the bank accounts of Telenor Pakistan, citing a disputed tax claim amounting to around Rs3.5 billion, which the company challenged and later was granted a stay order.

You would have to be crazy to invest in Pakistan right now - truly mad.

 

[Kingfisher]

In India, brigadier, major gen and up former faujis are wooed by telcos, spl signals ones. Very hefty pay packages, that lot are prized as far as those companies are concerned.

 

[RescueRanger]

In India, brigadier, major gen and up former faujis are wooed by telcos, spl signals ones. Very hefty pay packages, that lot are prized as far as those companies are concerned.

I suppose it will be more for their contacts and clout than their business acumen. Besides Military signals and commercial mobile telecoms are two separate beasts entirely.

 

[Kingfisher]

I suppose it will be more for their contacts and clout than their business acumen. Besides Military signals and commercial mobile telecoms are two separate beasts entirely.

Can't say. Mera ek uncle hai, retired as signals brigadier and made CTO of a company post retirement. Not directly, of course.. but got what seemed from the outside, as a relatively cushy profile, nice monies etc, spl compared to what the average ocifer fauji makes here in India.

but then in all his time in the fauj, he also stacked up all these other academic degrees etc to add to his portfolio. Lifelong fauji, apparently they were lining up to have him on board, and just for his apparent technical know-how etc., no nonsense fauji, not political afaik.

His daughter who heads a high level recruiting firm might have helped some too..

My kinda offtopic point was, k highly qualified faujis have many options post active duty, very lucrative ones.

Grunts ka bhi better ho raha hai scene, this uncle ji for example.. sab jawans, those who served as orderlies (I have mixed feelings about the practice, but nevermind) ek ek ko naukri etc dila ke set kia..

Ab samajh aata hai, back then we were kids kinda.. jawans dhakka de ke, gaadi manual tow kar ke ocifer sb ko last time residence phonchahte hain. It was all very tearful.

Then paid forward.

Long live our imperial faujs, both in India and Pakistan !

 

[Dalit]

I remember the days of PAKTEL and I can tell you on good authority that a certain few individuals are behind this misstep, ask yourself which telco operator stands the most to gain from the exit of competition, there will exist a duopoly in Pakistan if this continues and one which will benefit two companies in particular.

A very good friend of mine who was former C-Suite at Telenor Pakistan recalled this debacle to me prior to "quitting" Pakistan for good and moving to Dubai.

This sums up the state of Pakistan currently. What a greedy people that are leading Pakistan. It seems that such greedy people have infiltrated every layer of Pakistani society. From politicians to generals. From businessmen to a simple clerk. From a company CEO to a judge. Corruption and greed has overtaken just about every institution and person.

Expats and foreigners are also feeling the brunt. Well, good luck to Pakistanis because they are the ones that cannot leave. The few foreign companies have left. Expats refuse to support the current setup in Pakistan. In the end, it is the people of Pakistan that will suffer.

 

[nahtanbob]

Qatar Telecom and Oman Telecom preferred to go away from the Pakistani market mainly because of the flawed regulatory regime​

---

By Mehtab Haider
December 23, 2023

ISLAMABAD: Different telecom players are preferring to leave Pakistan, including a recent episode when Telenor Pakistan sold out its 100 stakes to the PTCL.

It seems something has gone fundamentally wrong, which is compelling them to wind up their operations in this part of the world.

This scribe conducted background discussions with certain experts in the telecom sector, who threw light on the overall prevailing business environment, resulting in their exit from Pakistan.

“It is a business venture that cannot be run on the basis of charity. A viable business is aimed at earning profits, and when it shrinks, then business will not stay at any such place,” a telecom expert said

He added that recently it was communicated that Telenor was exiting the Pakistan market, but reminded that a few years back, Warid had exited from the market as well.

He reminded that Qatar Telecom and Oman Telecom invested in World Call and Witribe, but both preferred to go away from the Pakistani market mainly because of the flawed regulatory regime as the government was not even willing to give them frequencies even on payment/ auction of frequencies in dollars, etc.

Another expert stated that Telenor’s repeated warnings and concerns about the formidable challenges in the sector’s business environment remained unaddressed, compelling it to wind up its operations from here.

Highlighting the regulatory risk exposure, Telenor Group, in its Annual Report 2022, noted that its Pakistan unit continues to be subject to arbitrary assessments and unpredictable application of tax regulations. Just last year, the Federal Board of Revenue (FBR) froze the bank accounts of Telenor Pakistan, citing a disputed tax claim amounting to around Rs3.5 billion, which the company challenged and later was granted a stay order.

Two years ago, the Inland Revenue Department, AJK, sealed multiple Telenor Pakistan network sites over a disputed tax demand, resulting in service disruption to most of the population of AJK.

Later, Telenor Pakistan was served a penalty of PKR 50 million by the Pakistan Telecommunication Authority due to service breakdown.

Telenor Pakistan, later, responded that the services were not shut down by the company; in fact, they were forced out of the company-operated towers and offices. Reportedly, no notice period was provided to Telenor to inform its subscribers of the service closure in advance.

In the second quarter of 2022, shares in Telenor ASA dropped after Norway’s biggest telecommunications company posted a $250 million impairment on its Pakistan operations due to a jump in funding costs and an adverse court ruling on license renewals.

“There has been a significant increase in interest rates, country risk premium, and market premiums, impacting the weighted average cost of capital,” the company said in its second-quarter report. “This, together with a hike in energy prices and increased global inflation, has made the outlook for Telenor Pakistan challenging.”

Among Telenor Group’s seven markets, Pakistan was the only country where it reported a heavy loss of Norwegian Krone 2,862 million last year, owing to a high cost of business, primarily high energy costs, interest rate hikes, and dollar-denominated spectrum instalments.

On the other hand, Pakistan also enacted an increase in its corporate income tax from 29 per cent to 33pc in 2022, which now reached an aggregated all-time high of 39pc.

Further underscoring risks and uncertainties in the latest quarterly report, the Telenor Group noted that its Asian markets, particularly Pakistan, are experiencing a deterioration of the political and economic situation. This may increase the risk of civil unrest, security concerns, and financial instability. The report further said that the macroeconomic outlook for Pakistan remains challenging and its entity is still sensitive to impairment.

Over the years, Telenor Pakistan, alongside other telecom companies, has actively advocated for policy interventions across various platforms to enhance the industry’s health and safeguard the viability of operations. Unfortunately, governments and policymakers have not heeded the industry’s warnings regarding an impending digital emergency, resulting in the departure of one of the most well-organised telecom groups globally — Telenor.

This sentiment is echoed by industry analysts who find Telenor’s exit not as a natural market consolidation or reorganisation, but as a consequence of a policy environment failure that compelled a hasty departure. This situation warrants a thorough and immediate introspection to help address the digital emergency.
First published: https://www.thenews.com.pk/print/1141003-why-have-foreign-telecom-players-chosen-to-exit-pakistan
--

@Olympus81 @_NOBODY_ if you recall this is what I was mentioning was going happen in the last forum prior to elections due to excessive taxation and restrictions by GOP.

No surprises here. The Pakistani state wants dough. They will fleece everyone. The PTI crowd wanted the same too

 

[RescueRanger]

No surprises here. The Pakistani state wants dough. They will fleece everyone. The PTI crowd wanted the same too

Show me one country that doesn't tax, but there is a way to go about it.

 

[Oscar]

Show me one country that doesn't tax, but there is a way to go about it.

Considering during Zardari raj the CEO of mobilink had to drop a suitcase of 5 lacs just to see him regarding 3G licenses Im sure not too much has changed.

Everyone is looking to cheat and steal now in Pakistan in every profession and at every level.

 

[Signalian]

I remember the days of PAKTEL and I can tell you on good authority that a certain few individuals are behind this misstep, ask yourself which telco operator stands the most to gain from the exit of competition, there will exist a duopoly in Pakistan if this continues and one which will benefit two companies in particular.

A very good friend of mine who was former C-Suite at Telenor Pakistan recalled this debacle to me prior to "quitting" Pakistan for good and moving to Dubai.

I worked in telco in Pakistan.

That boom has slumped. Mobilink made the most money followed by Ufone and Paktel, then Telenor and Warid came. Back in the day, the 2G freqs were 900 Mhz and the 3G was touted with 1800 and later 2100 Mhz. In case of vendors Nortel packed up early, but Nokia and Ericsson stayed, later ZTE came but huawei picked up especially for PTCL's 4G.

There is not enough coverage of 4G in Pakistan, the call drops down to 3G very quickly at some places while 2G is still serving. The world is moving towards 5G now, but that would mean that lower frequencies of 2G or 3G like the 800/900 band will need to be freed up also for 5G. The 4G or LTE can stay in 700 Mhz band for better coverage and building penetration of signals, but migration of mid band like 2100, 2600 Mhz etc need to be shifted to 4G also.

But why should Pakistan choose 5G/NR when 4G/LTE is not widespread and deployed to its full potential ?

I suppose it will be more for their contacts and clout than their business acumen. Besides Military signals and commercial mobile telecoms are two separate beasts entirely.

In some militaries, 4G/LTE is making an appearance in their radios, however, the basic principles of wireless comms are the same. Its the cellular technology in private sector which becomes a bit complex in planning and optimisation but its not rocket science.

 

[Archie]

Telecom is a highly competitive space , where the end customer chases the lowest priced plans, Even India is now basically a 3 Player market with Reliance Jio, Bharti Airtel and Vodafone Idea with state owned BSNL only having a 8% market share , that too because of its presence in remote part of India not covered by the big 3 Pvt players

 

[SD 10]

possibly the worst telecom network in the world. I cant even do a simple call without going on the roof or atleast first floor and even than it is not clear all the way! Its a complete shitshow, i have checked literally every network, some whose booster towers are not even a kilometer away from my home, they have not upgraded their network nor the machinery, and the towers are always overwhelmed..... They never factored in the growth of the population!

 

[nahtanbob]

Show me one country that doesn't tax, but there is a way to go about it.

Every government needs taxes to survive. In a couple of threads I noticed the zeal with which the PTI crowd wanted to collect taxes. Even if a fraction of that zeal was applied to other causes maybe Pakistan could have a different outcome