Telecom industry assessments suggest that Pakistanis are consuming more mobile data than ever at some of the world’s lowest prices, but the economics behind that affordability are coming under pressure just as the country enters a new cycle of spectrum payments, network upgrades and 5G investment.
This was the consensus among different stakeholders and industry experts during a background discussion with Business Recorder.
A customer currently pays approximately Rs29 per GB for mobile data, while average revenue per user (ARPU) remains around US$1 a month, placing Pakistan among the world’s lowest-revenue telecom markets. That equation is becoming harder to sustain as traffic rises and networks require more capacity to keep pace.
The pressure is set to intensify following the recent spectrum auction. Operators are collectively expected to pay at least US$510 million for newly acquired spectrum, with half due next year, while industry estimates suggest each operator may need to upgrade more than 1,000 mobile sites annually to expand capacity and prepare for 5G.
This comes on top of a sharp increase in the cost of running networks. Energy, imported equipment, freight and insurance have all become more expensive amid inflation, currency volatility and geopolitical tensions. Brent crude alone has climbed from around US$60 per barrel in December to nearly US$84.
Telecom companies say they already invest an estimated 15–20% of their annual revenues in network expansion and modernization. The challenge now is that data traffic and the investment needed to carry it are growing faster than the revenue generated by each subscriber.
It is a significant shift for a market where affordability has been one of the biggest drivers of digital adoption. Pakistan now has more than 208 million cellular subscribers and around 160 million mobile broadband users, with mobile networks supporting everything from digital payments and e-commerce to entertainment, education and public services.
The changing economics are also putting Pakistan’s retail tariff framework back into focus.
Under the existing regime, operators designated as having Significant Market Power require prior approval from the Pakistan Telecommunication Authority (PTA) for upward retail tariff revisions. The framework was designed to protect consumers and competition where an operator holds substantial market influence.
But the market around that framework is changing. Consolidation, additional spectrum, rapidly growing data consumption and the transition towards 5G are altering both the competitive landscape and the investment requirements facing the sector.
How Pakistan regulates retail pricing as those changes unfold could therefore become an increasingly important part of the wider telecom policy discussion.
There are several international models to draw from. In the United Kingdom, United States, Canada and Australia, routine mobile tariffs are generally determined commercially, while regulators concentrate on competition, transparency, consumer protection and abuse of market power.
India and Malaysia also largely follow market-based approaches to retail telecom pricing.
Greater commercial flexibility would not necessarily mean removing regulatory oversight.
Consumer notification requirements, pricing transparency and safeguards against misleading offers, discriminatory pricing, predatory conduct and abuse of market power can operate alongside commercially determined tariffs.
The more immediate question for Pakistan is how to preserve the affordability that has helped bring millions online without allowing low prices to constrain the investment needed to improve their experience once connected.
That is where the idea of “sustainable affordability” is beginning to gain relevance. Rather than choosing between low prices and higher investment, the challenge is to keep connectivity accessible while allowing sector revenues to grow sufficiently to support network expansion, better quality of service and 5G.
Gradual tariff rationalization could form part of that equation, particularly as spectrum payments and network investment accelerate. But any movement would have to be balanced against household affordability, competition and strong consumer safeguards.
For Pakistan’s telecom market, the next test may therefore be different from the last. Having succeeded in making mobile data remarkably cheap, the challenge now is making sure the networks delivering it can afford to keep up.