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ISLAMABAD: The Pakistan Telecommunication Authority (PTA) has observed that Mobile Termination Rates (MTR) is higher in the country than the international benchmarking and may revise downward to Rs0.30 per minute from October 1, 2021 against the current Rs0.70 per minute, it has been learnt.

The reduction in the MTR will help in reducing the variable cost of each operator allowing the benefit to be passed onto the customers in form of reduced tariffs, help operators to offer better off-net call rates, reduce the current differentials of on-net and off-net rates and protect interests of smaller operators, official sources revealed to Business Recorder.

The MTR is the "price that a Cellular Mobile Operator (CMO) charges to another mobile operator for terminating its off-net calls on its network".

Generally, the end users are not aware of wholesale termination charges, which are settled among the operators.

Higher termination charges expect to favour larger players as compared to smaller operators; hence, role of regulator is important to provide a level playing field by rationalising the termination rates in the telecom sector.

Further, effective implementation of interconnection promotes competition in telecom sector, the PTA added.

The PTA has undertaken international benchmarking analysis, which shows that the MTR calculated for Pakistan is between Rs0.28 to Rs0.30 as per purchasing power parity (PPP) adjustment and between Rs0.12 to Rs0.24 as per Average Revenue per User (ARPU) adjustments.

This shows that the current MTR of Rs0.70/min in Pakistan is still much higher than the calculated MTR using benchmarking.

Therefore, it is proposed that MTR in Pakistan may be determined @ Rs0.30 per minute w.e.f. 01st October 2021, documents revealed.

The last change in MTR was decided in 2018 based on international benchmarking. Adopting a glide path approach, a further review of MTR is required as current MTR @ Rs0.70/min in Pakistan is still higher than the international benchmarking results in 2018 i.e. MTR @ Rs0.30 to Rs0.43 per minute as per PPP adjustment and Rs0.18 to Rs0.19 per minute as per ARPU adjustment.

The MTR in Pakistan is also higher as compared to the MTRs in regional countries.

The PTA has also received requests from telecom operators to review the existing mobile termination rate.

Clause 5.1.12 of the Telecommunication Policy states that the cost-based interconnection charges will be reviewed not less than once every two years.

In the case of Pakistan, data on cost-based interconnection charges is not readily available.

Accordingly, this consultation paper provides benchmarking analysis for the determination of MTR in Pakistan in line with clause 18.6 of the interconnection guidelines, which allows the PTA to establish interconnection charges based on benchmarking when adequate cost information is not readily available.

The authority took the sample of 26 countries and average benchmark MTRs have been calculated using mean and median of PPP adjusted MTRs and compared with the PPP adjusted MTR of Pakistan.

Resultantly, proposed MTRs for Pakistan is calculated as Rs0.30 and Rs0.28 by mean and median benchmark respectively.

The ARPU in cellular mobile markets of the sample countries are between USD 1.37 to USD 30.96.

For alternate benchmarking, the authority has considered ARPUs of sample countries relative to Pakistan's ARPU.

Using this benchmarking method, proposed MTR for Pakistan is between Rs0.24 (mean) and Rs0.12 (median).

Therefore, current MTR in Pakistan @ Rs0.70 per minute is still on a much higher side compared to the above-proposed MTR based on international benchmarking.

Average benchmark MTRs have been calculated using mean and median of PPP adjusted MTRs and compared with the PPP adjusted MTR of Pakistan.

Resultantly, MTRs for Pakistan are calculated as Rs0.32 and Rs0.28 by mean and median benchmark respectively.

The ARPU in cellular mobile markets of the sample countries are between USD 1.37 to USD 24.12.

For alternate benchmarking, we have used ARPUs of sample countries relative to Pakistan's ARPU.

Using benchmarking adjusted for ARPUs, proposed MTR for Pakistan is Rs0.16 (mean) and Rs0.15 (median).

As evident from Table A3 of Annex A, countries have further reduced their MTR since 2018, resulting the decline of proposed Pakistan MTR in Table 2 based on the current benchmarking compared to that of 2018 determination i.e. proposed MTR for Pakistan based on PPP adjustment is between Rs0.28 - Rs0.32 compared to Rs0.30 to Rs0.43.

Considering MTR in USD of regional countries, Pakistan's MTR @ US cents 0.45 per minute is much higher than those of Bangladesh, India, Malaysia, and Sri Lanka that turn out to be US cents 0.16, 0, 0.24, and 0.28, respectively.

Copyright Business Recorder, 2021

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