On one hand, Starlink and 5G float into the news. On the other hand, existing connectivity leaves a lot to be desired. For example, a two-year delay of the availability of new spectrum is projected to result in a loss of $1.8bn (Rs500bn) in GDP over the 2025-2030 period compared to a baseline scenario in which all bands are sold, according to the report “Building Digital Pakistan Through Effective Spectrum Policy,” by GSMA.
Pakistan’s telcos invest in dollars, but the return on investment is in rupees. The mobile average return per user is less than $1 per month. With dollar depreciation, the total spectrum cost as a proportion of recurring revenue has risen from 11pc in 2014 to 20pc in 2022.
Low margins have contributed to the consolidation trend in Pakistan’s telco sector. In 2015, Mobilink merged with Warid to become Jazz. Pakistan Telecommunication Company Limited, which owns Ufone, has acquired Telenor.
Auctions are a common mechanism for assigning spectrum, particularly where there is excess demand. Internet spectrum refers to the range of radio frequencies used to transmit data wirelessly. It includes bands like Wi-Fi, 4G, and 5G, which allow devices to connect to the internet.
Past auctions in Pakistan have often resulted in unsold spectrum, contributing to slower 4G rollout and adoption. Analysis by GSMA Intelligence shows that if spectrum had been fully assigned in previous auctions, additional benefits of some $300m (Rs80 bn) would have been realised.
The report recommends that the “upcoming spectrum auction should focus on enhancing the country’s digital infrastructure rather than maximising government revenue”.
Published in Dawn, The Business and Finance Weekly, February 3rd, 2025
