LAHORE, Oct 22: The foreign direct investment (FDI) in the telecom sector has dropped by 21 per cent this year.

According to the third quarterly report of the Pakistan Telecommunication Authority (PTA), the total FDI in the sector was $1,824.3 million in 2007 which dropped to $1,438.6 million in 2008.

The authority maintains that main reason behind the decline is that cellular operators have already invested huge amounts to roll out the infrastructure, and, secondly, the local financial market has enabled them (operators) to generate sources locally.

However, the operators are of the view that ‘current uncertain situation’ has played a major role in keeping the FDI at bay. It is learnt that major investment by the leading operators may not resume even next year owing to prevailing economic and political uncertainty.

On the other hand, the PTA report reveals that subscribers’ growth rate has also registered a decrease of 61 per cent this year as compared to the corresponding period last year.

By June last year, total subscribers were 63 million and the number has risen to 89.5 million by Aug this year. The number of PTCL subscribers has also reduced from 4.6 million to 4.4 million this year, the report says.

By August this year, Mobilink has a subscriber-base of 31.5 million, Ufone 18.6, Telenor 18.3 million, Warid 15.9, Zong 4.8 million and Instaphone 321,134.

The reason of decline in the subscriber-base is said to be imposition of high taxes. A mobile user has to pay almost 31 per cent in terms of taxes/service charges which is at least 14 per cent higher than any where in the world. Now every customer has to pay Rs5 more in terms of service charges to the mobile phone company on topping every recharge of Rs100.

The stiff competition among cellular companies has compelled them to lower their call rates with an aim to capture subscribers’ market, which is also resulting in decrease in their profitability.

The PTA report further reveals that teledensity of mobile phones has only reached 55 per cent in the country, an increase of only 11 per cent to that of registered in 2007. It belies the claim of those even in the PTA that ‘around 90’ per cent of the total population of the country now has cell phone coverage.