Rising costs, connectivity outages — a tough year for IT sector



ISLAMABAD: Telecom operators and users bore the brunt of a challenging year for the IT industry, particularly following the April government change and subsequent tightening of budgets.

In 2022, internet and call rates increased, but service quality deteriorated and speeds slowed. After hours-long power outages and rising fuel costs, “connectivity load-shedding” intensified network outages.

The cloud-first policy, which aimed to steer federal public service organizations away from on-premise infrastructure, was one of the few bright spots.

Nonetheless, in the wake of hitting that cloud, the service expected too much when it set a $5 billion product focus for IT trades, figure partners express is by all accounts everything except reachable.

The export of 120,000 mobile phone sets to various markets in Africa and the Middle East was one bright spot in the otherwise bleak IT landscape.

However, the chief executive officer of Inovi Telecom, which shipped the shipment last month, stated that one-time, high-priced orders would not work and that regular export orders were necessary for the sector’s expansion.

To put it into perspective, Inovi is the only Pakistani company that has exported mobile phones from 31 licensed manufacturers.

Zeeshan Mian Noor, the company’s chief executive officer, told Dawn that the mobile industry had been granted a quota of letters of credit (LCs) worth $83 million per year to import key components for the assembly of mobile phone sets.

However, he stated that “the fact is that raw material worth $185 million is required to meet the demand for mobile sets in the Pakistani market,” and that exporting phones was a far-fetched goal because manufacturers were unable to satisfy local buyers’ demands.

Telecom trouble

The telecom business said it was the most obviously terrible hit in 2022 as working costs hopped by around 20% year-on-year, though the development of the business’ income neglected to hit even twofold digits.

The area has over and again demanded that Pakistan has one of the greatest degrees of tax assessment, loan fees and the rupee’s cheapening. It stated that the industry incurred more than Rs100 billion in unplanned expenses in the previous year as a result of all of this and rising energy costs.

Due to the sharp increase in diesel prices used to power businesses’ generators and power outages lasting up to 12 hours per day in some areas, there is no network coverage in a lot of the country during power outages.

“Diesel-run generators as well as the limit of batteries at the pinnacles were intended for a few hours of blackouts,” Jazz President Aamir Ibrahim told First light.

He regretted that the average revenue per user (ARPU), a crucial indicator of cellular mobile operators’ financial health, had decreased from $9 in 2003-2004, when there were only 2G services available, to less than one dollar.

Pakistanis pay 34.5 percent in taxes for each mobile call, including 19.5 percent general sales tax and 15 percent withholding tax. Call and internet rates have gone up as a result of the incumbent government’s tax hike, which has reduced consumption and further reduced company revenues.

On the other hand, customers are experiencing a significant increase in “call latency and black holes in the networks,” which are slowdowns or drops in internet or phone service.

Telecom organizations fault the public authority for not executing the right strategies and delaying the arranged range sell off.

Irfan Wahab Khan, CEO of Telenor Pakistan, stated that the country needed more spectrum to improve the telecom sector’s quality of service, and the government needed to come up with the right terms and conditions, including pricing.

IT exports

At the same time, the IT exports and freelancer performance suffered as a result of a number of restrictions imposed by the central bank, and the $5 billion IT exports target for the current fiscal year appears unattainable.

Former P@SHA chairman Barkan Saeed predicted that, against the $3.5 billion goal, IT and IT-enabled service exports would only reach $2.6 billion in the 2021-2022 fiscal year. Even that figure seems difficult this year solely because of inconsistent policies,” he stated.

The sector’s challenges were acknowledged by IT Minister Syed Aminul Haque. He told Dawn that the IT industry required “special attention, as it was not a standalone service or industry but a catalyst that could give a boost to all sectors through digitisation,” and that Dawn should pay attention to this.

However, he added that in 2022, his ministry’s performance “surpassed the output of other ministries.”

According to Mr. Haque, “the year had been challenging for the telecom sector due to various political and economic constraints; however, all the four telcos in the country have continued to serve the public without passing on the total rising cost of business.”

He featured that to give telecom administrations to unassuming communities and, surprisingly, the edges of significant urban areas, critical headway has been made by the General Administrations Asset (USF), giving network to around 4.5 million individuals. Significant progress was also made on the regulatory side, including the approval of the country’s cloud-first policy, among the IT ministry’s accomplishments.

Plus, the Individual Information Assurance Bill and Advanced Pakistan Strategy, 2023, are with the bureau for endorsement, and the man-made consciousness and specialist arrangements are in their last stages, which are probably going to help IT support organizations in the country.

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