Pakistan’s Telecom Sector Urges Reforms to Accelerate 5G Rollout

Pakistan’s telecom industry is at a critical juncture as operators push for 5G deployment amid economic and regulatory hurdles. Cellular Mobile Operators (CMOs) have submitted a set of recommendations to the government, aiming to make spectrum acquisition more affordable and to boost digital inclusion across the country.

The sector faces growing challenges from currency fluctuations, rising energy costs, high borrowing rates, and limited 5G-ready devices. Experts warn that without immediate policy support, Pakistan risks lagging behind regional peers in next-generation connectivity.

Key Challenges Facing Pakistan’s Telecom Industry

Telecom operators outlined the main obstacles affecting infrastructure investment and 5G adoption:

• Currency Depreciation: The Pakistani rupee has depreciated 100% between 2019 and 2024, sharply increasing spectrum and infrastructure costs. Around 80% of telecom CAPEX relies on USD-priced imports, compounding the financial strain.
• Rising Energy Costs: Fuel prices have surged 180%, and electricity costs have doubled, consuming roughly 25% of telecom operators’ operational expenses.
• High Borrowing Costs: Even after the policy rate reduction to 15%, affordable financing for network expansion remains limited.
• Spectrum Pricing and Availability: Soaring USD-denominated spectrum costs make acquiring additional bandwidth financially unfeasible under current conditions.
• Digital Divide: Nearly 57% of Pakistan’s population lacks mobile broadband, while 15% remain completely unconnected.
• 5G Handset Accessibility: Less than 1% of devices in Pakistan support 5G. The average 5G device costs almost twice the income of a typical household.
• Limited 5G Use Cases: Pakistan has yet to develop compelling 5G applications for consumers or businesses.
• Right of Way (RoW) Issues: Non-standardized policies and high fees slow network expansion, delaying 5G readiness.

Policy Recommendations to Support 5G

To overcome these hurdles and accelerate 5G deployment, telecom operators have proposed several key reforms:

• Stable Spectrum Payments: Peg spectrum fees to a stable exchange rate and conduct future pricing in PKR.
• Flexible Payment Plans: Introduce a 10-year, interest-free installment plan for spectrum payments to reduce upfront costs.
• ARPU Stabilization: Set minimum price thresholds to achieve an ARPU of USD 2 within three years.
• Tax Relief: Reduce WHT from 15% to 8% and harmonize GST at 16% to improve affordability.
• Industrial Power Tariffs: Classify telecom as critical infrastructure and provide industrial electricity rates to cut costs.
• USF/R&D Fund Moratorium: Suspend contributions for two years, then reduce rates from 2% to 1%.
• 5G Infrastructure Tax Incentives: Exempt 5G equipment, handsets, and related infrastructure from taxes.
• Enhanced RoW Policies: Streamline and standardize procedures for faster infrastructure deployment.
• Finalize Regulatory Frameworks: Implement pending frameworks for spectrum sharing, handset financing, and MVNO operations.

The Road Ahead

Industry leaders emphasize that timely reforms are crucial for Pakistan’s 5G ecosystem. Without strategic support, high costs and low device penetration could slow adoption. Experts argue that harmonized policies, tax incentives, and flexible spectrum payments will encourage investment, expand mobile broadband access, and drive digital transformation.

With over half the population still offline, these measures could bridge the digital divide while positioning Pakistan to compete in the regional 5G race.

Separately, the Chairman of the Pakistan Engineering Council, Engineer Wasim Nazir, briefed the Senate Standing Committee on Science and Technology, stating that 355 of the council’s 570 sanctioned posts are currently filled. He added that under the government’s right-sizing policy, 158 vacant positions in the Engineering Council have been abolished.

During the same meeting, Federal Minister for Science and Technology Khalid Magsi said his ministry was treated unfairly, as it faced the highest number of job cuts. He revealed that former Secretary Sajid Baloch sent files using his e-office account and knew its password, which the minister admitted he failed to conceal. Khalid Magsi claimed the former secretary acted out of frustration over a lack of promotion and had even planned to shut down the ministry, adding that vehicle testing responsibilities were shifted to the Ministry of Industries and Production.