Pakistan’s telecom industry is facing a growing financial challenge as extremely low mobile data prices coincide with rising network expenses, heavy spectrum payments and increasing investment requirements for 5G.
Mobile users in Pakistan currently pay around Rs29 per GB, while average revenue per user (ARPU) remains near $1 per month, placing the country among the world’s lowest-revenue telecom markets.
The low revenue comes as data consumption continues to grow rapidly, forcing operators to expand network capacity and invest in newer infrastructure.
The pressure is set to increase following the latest spectrum auction, under which telecom operators are expected to pay at least $510 million for additional spectrum. Half of this amount is due next year.
Operators may also need to upgrade more than 1,000 mobile sites each year to handle rising traffic and prepare their networks for 5G services, according to industry estimates.
Meanwhile, the cost of operating and expanding telecom networks has increased significantly. Energy, imported equipment, freight and insurance expenses have all risen amid inflation, exchange-rate volatility and geopolitical uncertainty.
Telecom companies already allocate an estimated 15% to 20% of their annual revenues to network expansion and modernization. However, the industry is now facing a widening gap between the pace of data growth and the revenue generated from subscribers.
Pakistan has more than 208 million cellular subscribers and approximately 160 million mobile broadband users. Mobile connectivity has become central to digital payments, e-commerce, education, entertainment and a growing range of online services.
The changing economics are also renewing debate over the country’s telecom pricing framework.
Operators classified by the Pakistan Telecommunication Authority (PTA) as having Significant Market Power currently require regulatory approval before increasing retail tariffs. The framework is intended to protect consumers and competition where an operator has substantial market influence.
However, the telecom market has evolved significantly, with greater consolidation, additional spectrum requirements, rapidly rising data usage and the shift toward 5G increasing operators’ capital requirements.
This has raised questions over whether telecom companies should receive greater flexibility in setting retail prices while remaining subject to consumer and competition safeguards.
In several international markets, including the UK, US, Canada and Australia, mobile operators generally determine regular tariffs commercially. Regulators instead focus on competition, transparency, consumer protection and preventing abuse of market power. India and Malaysia also largely follow market-based telecom pricing models.
A more flexible pricing system would not necessarily mean removing regulatory controls. Requirements for transparent pricing, consumer notifications and protection against misleading promotions, discriminatory pricing, predatory conduct and market abuse could remain in place.
For Pakistan, the central challenge is increasingly about maintaining affordable connectivity while ensuring telecom companies can generate enough revenue to invest in network capacity and quality.
A gradual adjustment in tariffs could become part of the solution as spectrum costs and 5G investment requirements rise. Any such move, however, would need to balance consumer affordability with competition and adequate regulatory protection.
Pakistan has built one of the world’s most affordable mobile data markets, helping expand internet access across the country. The next challenge is ensuring that low prices do not undermine the investment required to maintain network quality, accommodate growing data traffic and roll out 5G.
