Telenor reconsiders investment plans after tax and 3G price hikes

10 Jul 2013

Pakistan’s second largest cellco by subscribers, Telenor, has said that it will reconsider its decision to participate in a future auction for 3G licences and for investing in the country in the future. The revelation followed a government decision to impose a further 5% withholding tax on wireless services, increasing to 15% from 10%, whilst upping the target income from the sale of 3G concessions to USD1.2 billion from the current USD800 million. The Express Tribune quotes the cellco’s CEO, Lars Christian Luel, as saying: ‘I understand that the tax base has to increase, but we would rather see an expanded tax base rather than the greatening burdening of industry and individuals who are already taxed.’ The official also noted that Telenor’s revenues would be put under pressure, as customers are already required to pay a 19.5% federal excise duty on services, adding: ‘We think it is reckless to impose these taxes on the common man in the street, while those who have the ability to pay are not taxed.’ On the increase in price for 3G concessions, Luel decribed the government’s plans as ‘wishful thinking’, claiming that ‘the value of the 3G licence is decreasing as more taxes and regulations are imposed.’

Telenor has reportedly called on the ministries of information technology and finance to either remove certain regulatory requirements – referring specifically to limitations on the number of SIM cards a person can own, the ban on late-night packages and service blackouts – or reduce taxes, as both combined made new investment less and less attractive. Luel lamented that: ‘It seems that in every meeting we attend [with the Ministry of Information Technology], we come out worse off.’

Pakistan, Telenor Pakistan