CMOs Economic Challenges Put PTA in trouble

CMOs Economic Challenges Put PTA in trouble

Cellular mobile operators (CMOs) threaten Pakistan Telecommunication Authority (PTA) to suspend telecom services and claim “force majeure” due to budget constraints, load shedding, and increased LC cash margin.

On June 24, 2022, PTA addressed a joint letter to Telenor, Jazz, and Ufone asking them to explicitly outline the issues with meeting the rollout requirements since, in their opinion, there are no legitimate financial grounds. 

Telecom operators, on the other hand, regarded it as a huge problem that is way out of their hands. On June 14, they issued a letter to Muhammad Shuaib, Director General (Enforcement), PTA, pointing out different causes of subpar service delivery.

The CMOs urged the director-general to render a “favorable judgment” so that the industry could continue offering vital telecom services to the public. This letter was signed by Naveed Khalid Butt, the chief regulatory officer of PTCL and Ufone Group, Syed Fakhar Ahmed, chief corporate affairs officer of Jazz, and Kamal Ahmad, chief corporate affairs officer of Telenor.

The CMOs said that energy load shedding had increased, particularly in rural areas, and that their current backup such as generators and batteries was only just able to keep up with the number of outages.

According to them, the rapidly rising cost of fuel was a major constraint on the availability of backup generators for base transceiver station (BTS) installations around-the-clock.

Other than that, the CMOs also criticized The State Bank of Pakistan in the letter for enforcing a 100% cash margin on import letters of credit, which increased the LC cash margin on all imports of telecom equipment from 10% to 100%. (SBP).

“We are taking every opportunity to timeously notify PTA and believe that the authority will carefully consider the conditions over and above our control while assessing the license compliance and enforcement matters”, they said in conclusion. 

However, PTA has also questioned the highlighted financial restrictions in response and emphasized that, if appropriate, the CMOs’ suggestion for a tariff increase may be taken into consideration. As per them, the CMOs were using the force majeure clause to explain poor service quality while failing to satisfy their rollout responsibilities.

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