We often refer to IT and Telecom as separate platforms; they are not! Communication in our lives today is as natural as breathing, and the role of unified and seamless communication cannot be overstressed. It enables access to gain, store, transmit, and manipulate information.
The cellphone, powered by Telecommunications, is at the center of it all. The journey from analog to digital is best illustrated by the wondrous smartphone and the plethora of applications that are now an inseparable part of our collective consciousness. We often begin and end our day on our phones, and like a limb, it comes with us wherever we go.
Globally, Telecommunications remains a competitive and fast-growing sector. According to The Mobile Economy Report 2020, there will be a total of 6 billion unique mobile subscribers at the end of 2025. Imagine! Moreover, there will be 1.8 billion 5G connections by 2025 (GSMA, 2021).
The point to note is that this growth is integral to the economy of each country as it empowers and enables an entire stream of business, creating sub-economies and whole ecosystems.
The Indian Telecom industry, for instance, is the second largest in the world, with a subscriber base of over 1,170 million (January 2023). It underwent high-paced market liberalization and is now one of the most prominent Telecom markets in the world.
Being a lifestyle enabler, it has supported socio-economic development, education through literacy campaigns and mass online education, transparency through e-governance and e-commerce, and is now in the transformational phase with an increasing focus on coding, data analysis, and machine learning.
The Indians, using the “India Stack,” a moniker for a set of open APIs and digital rails, have helped ordinary people unlock identity, data, and payments at scale with a whopping USD 170 billion of monthly real-time mobile payments.
Nasscom reports that the export revenue in the IT sector in FY22-23 is expected to rise, by 11.4%, to USD 194 billion. To put this in perspective, Aramco’s net income in 2022 was USD 161.1 Billion.
We must appreciate the fact that we are faced with fourth industrial revolution technologies, including Artificial Intelligence (AI) and Machine Learning (ML), which may be more disruptive today than personal computing in the 90s or the smartphone after 2007. The speed of change is unprecedented and not competing is not an option.
ChatGPT crossed 1 Million+ user in just 5 days, whereas Facebook took 10 months and Netflix took 41 months. Pakistan has about 60% of its population in the 15-29 age group, representing enormous human and knowledge capital.
With more than 2,000 IT companies and call centers, 300,000 English-speaking IT professionals with expertise in current and emerging IT products and technologies, 13 Software Technology Parks, and around 20,000 annual IT graduates and engineers, the country’s statistics beg the question: why, pray tell, a meagre USD 2 billion of IT exports?
The lack of a permanent policy framework has been our undoing in all spheres, and digital/Telecommunications is no different. Instead of facilitating industrial growth by encouraging investments, we have penalized profits and, as a consequence, incentives through harsh taxation.
Pakistan has 5 main players in the Telecommunications industry, and they have brought ease to our people, and growth to the businesses, in addition to creating massive employment opportunities, thereby enabling a significant proportion of the population to become worthy contributors to a developing economy.
Just to quote a few headline numbers, cellular subscriptions in Pakistan have crossed the 183 million mark, and broadband subscriptions have crossed 101 million, including 98 million 3G and 4G subscribers. Jazz continues to dominate with 37.80% subscribers, followed by Telenor Pakistan at 26.71%, Zong at 21.90%, Ufone at 12.81% and the Special Communications Organization (SCO) at 0.77%.
During the reporting period, 4G users have grown from 66 million to 74 million. Coming to the 4G market share, Jazz leads this segment as well, with 28.86 million 4G subscribers, followed by Zong with 22.49 million, Telenor Pakistan with 16.10 million, Ufone with 6 million, and SCO with 0.7 million subscribers.
A good example of the resilience of this industry is the aftermath of Covid-19, where many businesses coped based on digital transactions, online meeting rooms, and conferencing through Zoom and MS Teams through different devices, but chief amongst them is the cellphone – an enabler, undoubtedly!
One area of focus where we can do wonders is the international and regional trade that is closely linked with the network of optical fiber – Artificial Intelligence (AI) will have a transformative impact here with data creation and analytics, autonomous vehicles, logistical routing, smart roads, etc.
Pakistan has a promising opportunity for regional trade with the Central Asian Republics (CARs) and China and needs the support of its telecommunications infrastructure today like never before. Now is the time to expand our pool of digitally literate and equipped human resource to take Pakistan forward, to raise rural communities with access to development opportunities, and to be visible on the international stage as a powerhouse of knowledge, skill, and initiative.
But alas, we continue to remain mired in bureaucracy and a sordid tax regime that seems bent on stifling and suffocating growth. With GST at 19.5%, additional withholding tax at 15%, and corporate tax at 34%, we have not only hindered the rise of the Telecommunications industry but adversely impacted the entire trajectory of the economy.
That we desperately need an investor-friendly, long-term policy framework is a given, but moreover, 4G needs to be strengthened via the availability of towers and low-priced smartphones.
Pakistan needs its 250 million population to have access to the digital world for the development of digital literacy and commerce simultaneously. It is all hands on deck now! Sensible taxation and facilitation for Foreign Direct Investment (FDI) have never been more urgent and more important.
The new era defines literacy as digital literacy, commerce as an online business, and connectivity as cyber connectivity; unless we lower taxes and make the availability of smartphones ubiquitous, we may as well be running on a hamster wheel, getting nowhere fast.
In the absence of any immediate, long-term action, the IT industry will continue to take hits, and so will the entire network of manufacturers, collaborators, and freelancers, with a cascading effect down to users.
GSMA Intelligence unit ranks Pakistan at the 267th position out of 269 Telecom markets, with a sub one-dollar Average Revenue Per User (ARPU). If the industry’s growth statistics in the preceding paragraph had given you comfort, think again! The decline (or possibly collapse) of Telecommunications / IT / cellular is not going to be an isolated event.
It is going to be that notorious iceberg that ripped apart the erstwhile unsinkable ship, and we may well be those poor oblivious souls enjoying the music on our way down.