Rob Conway, Chief Executive Officer of the GSMA, met in Islamabad recently with President Pervez Musharraf to strengthen cooperation between the government and the mobile industry in getting the next 50 million users in Pakistan connected to mobile. On Saturday, the GSMA CEO met with Prime Minister Shaukat Aziz, along with CEO's from Ufone (Mubashir Naqvi), Mobilink (Zouhair Khaliq), Paktel (Guo Yonghong), Telenor Pakistan (Tore Johnsen), and Warid (Hamid Farooq), as well as the Minister of Telecommunications & IT, Awais Leghari, and Chairman of the Pakistan Telecommunications Authority (PTA), Shahzada Malik.

In his meetings with the President and the Prime Minister, Mr. Conway suggested that eliminating the 500 Rupees activation tax paid by consumers and the industry would increase mobile penetration and lead to an increase in total tax revenues for the government. The elimination of this tax could significantly increase mobile usage and fuel economic growth, according to a study by consultancy Deloitte on behalf of the GSMA.

From his meetings with the President and Prime Minister, Mr. Conway came away with a full appreciation of the Government’s strong commitment to continue to lower barriers to accessing mobile communications and progress the hugely successful program of increasing telecommunications penetration. In this regard, Mr. Conway congratulated the President and the Prime Minister, as well as Minister Leghari and PTA Chairman Malik, for Pakistan’s recent achievements in extending access to mobile communications.

"By lowering barriers to connectivity, the mobile industry can connect the unconnected in Pakistan. The activation tax is a significant barrier for people looking to own a mobile phone and represents a constraint for operators seeking to expand into rural areas," said Mr. Conway. "With 50 million mobile users and 30% penetration, Pakistan is now a leader in mobile usage in south Asia. The next step is to build on that achievement by eliminating the activation tax and securing further economic and social benefits for the Pakistani people."

The GSMA also released the preliminary results of a study* prepared by Deloitte, which estimates that the mobile industry has created 220,000 high-paying jobs in Pakistan and accounts for 5% of its Gross Domestic Product (GDP) and approximately 6% of the total taxes collected by the Central Board of Revenue. The study also found that Pakistan’s economy and society is benefiting from rising mobile phone usage and low tariffs, which lowers the cost of doing business and improves productivity, while helping families and friends to connect to each other at home and abroad.

Deloitte estimates that over a period of 10 years the elimination of the activation tax would generate an additional 132 billion Rupees (US$2.17 billion) in total tax revenues through the positive impact on the mobile industry and its spill over into the broader economy, above what the government would obtain maintaining the tax. The study shows that tax collections from the mobile industry would grow consistently year on year in the period 2007-2017 due to increased penetration and higher revenues.

Last year, mobile operators invested US$2 billion in Pakistan, 54% of the total foreign direct investment in the country, according to the Pakistan Telecommunications Authority. "It is very important that the government of Pakistan sends a clear signal to the mobile industry and its investors that it will continue to help operators to connect the unconnected by eliminating the activation tax of 500 Rupees in the next budget," said Mr. Conway.

The GSMA looks forward to working further with the government of Pakistan to use mobile phones to improve information and communication services in Pakistan and drive economic development.

Source: GSM Association