Telenor Unhappy with Higher Taxes May Drop Out of Pakistan’s 3G License Auction

Chirstian Luel, CEO of second-largest telecom company of Pakistan, Telenor, said that his group will reconsider its decision its decision to participate in upcoming 3G spectrum auction as well as further investment in the country.

While criticizing the governments decisions to impose new taxes on the industry, Luel said that mobile service providers “are not money-making machines”.  He said, “I understand that the tax base has to increase, but we would rather see an expanded tax base rather than the greatening burdening of industry and individuals who are already taxed.”

He further said, “We think it is reckless to impose these taxes on the common man in the street, while those who have the ability to pay are not taxed,” Luel complained. He feared that the move will pressure the company’s revenues, as customers’ ability to spend has more or less reached its limit.


“The value of the 3G license is decreasing as more taxes and regulations are imposed,” he added. He also noted that Telenor has pulled out from bidding in other countries due to the high price of the auction.

Leul also complained that the new government had “taken” the USF away from the telecom industry, in contravention to the Telecom Act. The industry is paying 1.5% of its yearly revenues in USF, which is supposed to be used to build infrastructure in remote areas, he pointed out. “Taking our money is a sign that regulatory regimes in Pakistan are becoming less predictable and also shows how the industry is treated.” He said the industry has proposed that the government now reduce tax rates in return for using the industry’s funds.


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