Islamabad: Pakistan’s telecommunications industry faced significant setbacks in foreign direct investment (FDI), contributions to the national exchequer, and overall investments during fiscal year 2023-2024, highlighting the broader economic challenges facing the country. According to the annual report released by the Pakistan Telecommunication Authority (PTA) on Monday, foreign direct investment in the sector fell by 21% to $46 million in 2023-24, compared to $58 million in 2022-23. This decline continues its downward trend from $204 million in 2020-2021 and $175 million in 2021-2022.
Likewise, investments in the telecommunications sector decreased slightly by 0.65%, reaching $765 million in 2023-2024, compared to $770 million in the previous year. This represents a significant decline from $1.657 billion in 2021-22 and $1.214 billion in 2020-21. Despite this, mobile operators (CMOs) increased their share of investments, contributing $431 million in 2023-2024, up from $396 million in 2022-2023. Over the past five years, total investments in the sector have exceeded $3.63 billion.
The PTA report also highlighted record telecom revenues of Rs955 billion in 2023-24, with a contribution of Rs335 billion to the national exchequer. However, this contribution was slightly lower than the Rs 341 billion recorded in 2022-23.
Mobile average revenue per user (ARPU) saw a significant rise, reaching Rs 276 per month in 2023-24, compared to Rs 229 in the previous year. During the April-June 2024 quarter, average revenue per user (ARPU) increased to Rs 302 per month. Among operators, Jazz and Ufone registered strong growth, with ARPU numbers standing at Rs 327 and Rs 280, respectively, in 2023-24, compared to Rs 254 and Rs 233 in the previous year. Telenor and Zong also reported increases, with ARPU standing at Rs 214 and Rs 258, respectively.
Data revenue now represents 65% of total mobile industry revenue, underscoring the growing importance of broadband and digital services in increasing profitability.
Challenges in 5G rollout
The PTA report identified significant obstacles to 5G deployment in Pakistan, including large investment requirements, slow returns, and limited availability of compatible phones. Infrastructure upgrades, such as installing advanced antennas and fiber optic connections, require significant capital, while price-sensitive consumers pose an additional challenge.
To address these issues, the report emphasized the need for government incentives and public-private partnerships. Bridging the digital divide remains critical, as rural areas struggle with logistical and cost barriers. Public awareness campaigns are also essential to dispel misconceptions about 5G and educate consumers about its benefits.
Increasing cybersecurity threats
The report highlighted a worrying increase in cyberattacks over the period 2023-2024, including malware, phishing, ransomware and insider threats. Advanced persistent threats (APTs) such as Gamaredon, Lazarus, and SideWinder have targeted critical infrastructure, healthcare entities, and government organizations in Pakistan.
Globally, the telecommunications sector ranked fifth most targeted by phishing attacks, which increased by 173% in the period 2023-2024. Despite these challenges, Pakistan has improved its standing in the 2024 Global Cybersecurity Index, advancing to Tier 1 (Role Model) and ranking among the top 40 countries, up from 79th previously.
Commenting on the decline in FDI and investments, PTA Board Member Muhammad Naveed attributed these trends to the broader economic difficulties faced by Pakistan. Despite these challenges, the telecommunications sector remains a vital contributor to the national economy.
Meanwhile, Senate President Syed Yousuf Raza Gilani urged the government to reduce the digital divide between rural and urban areas and integrate AI solutions across sectors. Speaking at the National Broadband Forum 2024, organized by PTA in collaboration with Huawei, Mr. Gilani emphasized the need for high-quality Internet and IT services for the public.
“To achieve this, the government must remove barriers to Internet efficiency and strengthen public-private partnerships to advance its digital agenda,” he said.
Industry leaders have expressed concerns about sudden internet shutdowns, throttling and app bans, deterring investors. Jazz CEO Amer Ibrahim noted that while the government plans to hold a 5G auction in April 2025, “4G for all is better than 5G for a few.” He urged the authorities to address the shortfall in spectrum usage and put in place policies to raise the average revenue per user to global averages.
Minister of State for Information Technology Sheza Fatima confirmed the continued government support to bridge the digital gap. Acknowledging the security and internet challenges, she expressed optimism about the potential of satellite internet to improve connectivity nationwide.
Industry and Commerce Minister Zarar Khan stressed efforts to build a digitally inclusive Pakistan, adding that tax cuts for the IT sector could be considered if reinvestment in infrastructure is ensured.
The event also included insights from PTA Chairman Major General (Retd) Hafeezur Rahman and Huawei President Feng Qishan, who emphasized the role of innovation in expanding broadband access.
NBN Forum 2024, the second in a series of international forums hosted by the PTA, aims to increase broadband penetration in Pakistan.