Guess how Taxes impacted Telcos and the Government itself

Posted by ProPakistani on April 30th, 2009


We have discussed before, how the Government of Pakistan tried to recover their budget deficits from Telecom sector in 2008/09 budget. We had mentioned then that this is a clear misjudgment of the government to heavily rely on a single sector, and this could ultimately return results in negative manner.

After almost a year now, this has been proved that added taxes didn’t turn only negatively for government, as it received decreased (or lesser than estimated) taxes from telecom, but industry itself got impacted in a significant way.
Serious implications, that have been witnessed throughout the year, are shouting that government must re-consider its tax policy. Here I would opine that Pakistan Telecommunication Authority also failed to convince federal government over taxes issue, as I believe regulator had an idea of the high tax consequences.

It may be recalled that excise on telecom services were raised to 21%, which was previously 15 percent. Similarly, handset industry was not left behind, as Rs. 750 tax was imposed on import of each cell phone.

Cellular Industry

In order to study implications of taxes on cellular services, first let’s review following graphs and table to know the telecom contribution to Exchequer in recent years

gst collection Guess how Taxes impacted Telcos and the Government itself

activation tax Guess how Taxes impacted Telcos and the Government itself

pta deposits Guess how Taxes impacted Telcos and the Government itself

telecom contribution to exchequer Guess how Taxes impacted Telcos and the Government itselftelecom contribution table Guess how Taxes impacted Telcos and the Government itself

Clearly, growth rate of GST/FED contribution fell down, even the estimated value of Rs. 120 billion was not met in year 2007-08 for Telecom contribution.

Thanks to higher GST, rate of connected calls was low, resultantly low cellular revenues and ARPU, and in return the low contribution towards national exchequer.

You will agree with me after having a look at following graph

fedgst subscribers1 Guess how Taxes impacted Telcos and the Government itself

See, how the growth rate of GST/FED collection is impacted, also the subscribers growth rate.

One may ask me that we should not term high taxes as only reason for this situation, for instance, he/she may question to add other elements too, such as, recession, then my answer is that recession should have impacted GST/FED Collection rate only, not the subscribers growth rate. Viewing the both lines hitting rock bottom level reveals that high taxes are playing pivotal role in all this.

Handset Industry

Rs. 500 custom duty and Rs. 250 regulatory duty on each handset has impeded handset growth in the country. This negative growth rate can be termed good, as few may comment that Pakistan saved some bucks for not buying phones, but unfortunately, this is not the case; as these high taxes encouraged illegal import of cell phones.

Federal board of Statistics reported that handset imports fell by 76 percent in the three-quarters of the current fiscal year 2008-09. However, on other hands, mobile manufacturers are of the view these high taxes hit the industry as well as the government alike.

Conclusion

Government must re-think the tax policy and must bring down GST to 15 percent level to help cellular companies achieve greater ARPU. Similarly, removal of activation tax can revive the lost growth rate of subscribers’ addition. Government should relieve handset market too by dropping the tax level on handsets

Copyright © 2009 ProPakistani.com

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China Mobile Stands 7th in World’s Most Valuable Brands

Posted by ProPakistani on April 30th, 2009


brandz top 100 300x207 China Mobile Stands 7th in World’s Most Valuable BrandsMillward Brown, a subsidiary of the WPP, has come out with its annual list and report, BrandZ, that ranks the most valuable brands in the world.

China Mobile, Chinese Telecom Giant, that has its existence in Pakistan through CMPak (Zong), is rated as world’s 7th most valuable brand with total value of US 61.2 billion dollars.

Here’s the top 25 list and a screenshot of the top 100 below:

  1. Google ($100 B)
  2. Microsoft ($76.2 B)
  3. Coca-Cola ($67.6 B)
  4. IBM ($66.6 B)
  5. McDonalds ($66.5 B)
  6. Apple ($66.1 B)
  7. China Mobile ($61.2 B)
  8. GE ($59.7 B)
  9. Vodafone ($53.7 B)
  10. Marlboro ($49.4 B)
  11. Walmart ($41 B)
  12. ICBC ($35 B)
  13. Nokia ($35.1 B)
  14. Toyota ($29.9 B)
  15. UPS ($27.8 B)
  16. Blackberry ($27.4 B)
  17. HP ($26.7 B)
  18. BMW ($23.9 B)
  19. SAP ($23.6 B)
  20. Disney ($23.1 B)
  21. Tesco ($22.9 B)
  22. Gillete ($22.9 B)
  23. Intel ($22.8 B)
  24. China Construction Bank ($22.8 B)
  25. Oracle ($21.4 B)
Copyright © 2009 ProPakistani.com

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Karachi Paralyzed. 30+ Dead. Targetted Killings Continue. Citizen Brace For Even Worse.

Posted by Adil Najam on April 30th, 2009


Adil Najam

It is not as if there is a dearth of bad news in Pakistan. But bad news attracts more bad news. That is the nature of the politics of downward spirals.

Karachi has been far from calm for a very long time (here, here, here, here). Yesterday, the heat went up again. During this month of April alone there have been more than 50 targetted killings in Karachi. Yesterday, more than 30 died as more escalated public violence broke out. Today the city is reported to be paralyzed. Even though there exisits an uneasy calm in town, many wait in fear as things going even worse in Karachi will really surprise no one.

In a post back in November, 2008, I had written:

Karachi used to be called “the city that never sleeps.” It may as well now be called “the city that forever bleeds…

Everyone seems to know the script of the drama that is about to unfold, yet again, on the streets of Karachi. Except that the deaths will be real, not make-believe. Those who will be doing the killing have been arming up. Those who will be doing the instigation have already upped their rhetoric of hate, division and violence. Those who will be doing the dying, remain on knife’s edge, hoping that they will not be called upon to be sacrificed in the rituals of ethnic murder, so close to the Eid of sacrifice. The rest sit stunned in inaction as the politics of mayhem readies to raise its ugly head yet again. We see Pakistani kill Pakistani in the name of Pakistan. We sit afraid. Very afraid.”

The post was titled, “Karachi Bleeds Again: Worse To Come?” Obviously, it came. One can ask that question again: Will things get even worse? Many would answer, “Nearly certainly.” I hope they would be wrong, but hope does flickers when things get as bad as they have.

One assumes that our readers know all the gory details of what has been happening in Karachi. If not, here is a story from Dawn:

The city remained virtually paralysed by fear on Thursday with most businesses closed and many public transport vehicles off the city roads, as violence, which was triggered on Wednesday, killed scores of people in 24 hours and forced citizens to remain indoors. Incidents of firing and arson early Thursday morning further convinced citizens to remain at home rather than go to work, resulting in low turnouts at both private and government offices. Several bank branches remained shut due to the lack of staff. Normally abuzz with activity every morning, the city wore a deserted look, as schools and all other educational institutions also remained closed, in line with a late-night government decision.

With no official word from the authorities so far regarding the reasons for the violence, transporters and representatives of the business community doubt the situation will get much better in the coming few days. ‘The majority of transporters are convinced that the situation is not fit for business,’ said Irshad Bukhari, president of the Karachi Transport Ittehad. ‘A total of 55 minibuses and coaches were set on fire in less than 12 hours and some four drivers lost their lives in incidents of targeted killing,’ he said. He said a senior official of the provincial transport ministry approached him after the incidents of arson, and assured him that further deliberations and discussions on the subject would take place to provide protection and security to transporters. ‘But there has been no response yet after that single call. We have called our general body meeting on May 2 to plan our future strategy in the wake of the recent spate of violence,’ added Mr Bukhari. ‘But I don’t think that there would be any positive response from our members to cooperate with the government without any solid measures [on the government’s part].’

MOST MARKET REMAINS SHUT. The transport sector was not the only one badly hit by the violence. Major business centres in the city also remained closed, while there was hardly any activity at retail markets in the metropolis. Most markets remained shut, though a few did open in residential areas in the southern district of the city. Business leaders allege that though currently shops and businesses are being targeted on the basis of the ethnicity of the shops’ owners, shopkeepers of all ethnicities are still worried about the development. ‘In old areas of the city, there are nearly a dozen retail and wholesale markets, and people there received threats from unknown groups through pamphlets to keep their businesses closed,’ said Ateeq Meer, chairman of the Alliance of Market Associations, which is seen as a common platform for nearly 300 market and traders’ associations in the city. He observed that while the majority of market associations decided to shut down of their own volition, given the unavailability of transport and the absence of staff, traders in Mithadar, Kharadar, Light House, Kapra Market and some other busy markets were formally asked to observe a ‘holiday’.

‘We have seen a dangerous trend in the recent violence, as the shops of only those traders have been damaged who belong to a particular ethnic group,’ Mr Meer said. ‘For instance,’ he added, ‘the majority of those who have lost their shops were traders of carpets, cloth and second-hand garments. These people have been engaged in these businesses in Karachi since the inception of Pakistan.’ Both the transporters and traders were in agreement over their reaction to the government’s promised measures to contain the violence and arrest those responsible. ‘We have been given assurances for decades, but they have never worked,’ said Mr Bukhari, of the Karachi Transport Ittehad. Mr Meer, of the AMA, echoed these thoughts, saying ‘it is time to act, rather than to make pledges. We witness government announcements after every outbreak of violence, but the bloodshed returns after every few months.’


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Another news item in Dawn, explains how this is an escalation of a longer campaign of violence:

As many as 50 people were killed and 94 others were wounded in different incidents of targeted killings carried out in the city during the month of April. Up till April 28 the police record showed that 16 people had been shot dead in different incidents of targeted killings. However, on April 29 there was a sharp spike in the violence, as the figures soared to 34 persons killed and 40 wounded in a matter of hours by unidentified gunmen in different parts of the city, statistics gathered by the police showed. The statistics further showed that during the month-long acts of violence, 43 people belonging to the Pakhtun community were killed while seven Urdu-speaking people were slain in different parts of the city, the police data indicated, lending strength to the argument advanced by some observers that the violence was designed to foment ethnic unrest in Karachi.

Apart from the loss of life, mostly private property including shops, hotels, auto-rickshaws and minibuses, were also set on fire by unknown suspects in different parts of Karachi. It should be noted that while these targeted killings occurred across the city throughout the month, the police and Rangers failed to check these incidents. Following city-wide disturbances which erupted after the targeted killing of an activist of the Pukhtoon Students Federation at Pakistan Chowk in the limits of the Aram Bagh police station, the administration imposed a ban on pillion-riding in the city. But despite the imposition of the ban the targeted killings continued unabated, as the law enforcement personnel failed to nab even a single suspect involved in the violence.

The ethnic dimension of how events are unfolding in Karachi makes things even more worrisome and dangerous. Using religion as a justification for violence, as extremists and terrorists are doing in Swat and elsewhere, is dangerous. Using ethnicity to do so is no less dangerous.

PTCL Net Profit in 3rd Quarter Falls on Lower Revenue

Posted by ProPakistani on April 30th, 2009


PTCL, the nation’s biggest phone-service provider, reported a 36 percent decline in third-quarter profit after it lost business to rivals.

The company recorded a profit of 1.91 billion rupees ($24 million), or 0.37 rupee a share, in the three months ended March 31, from 2.98 billion rupees, or 0.58 rupee, a year earlier, the Islamabad-based company said in a statement to the Karachi Stock Exchange today. Revenue fell to 13.9 billion rupees from 16.2 billion rupees.

“It’s a fight for market share in the highly competitive telecom market that’s hurting profit,” said Khurram Merchant, research analyst at Invisor Securities, in Karachi, who has a “buy” recommendation on the stock.

Pakistan Telecom has lost business to rivals including Telenor Asa. and China Mobile Communications Ltd. since 2004 when the government gave licenses to non-state telephone companies to start business, ending its monopoly.

The company recorded a nine month profit of 7.22 billion rupees or 1.42 rupees a share, compared with a net loss of 6.56 billion rupees, or 1.29 rupees a share a year ago, the statement said.

Pakistan Telecom shares, which have risen 3.3 percent this year, fell 4.9 percent to 17.45 rupees as of 1:58 p.m. local time on the Karachi Stock Exchange.

Emirates Telecommunications, the state-owned telephone provider in the United Arab Emirates, won management control of Pakistan Telecom in April 2006 after it bought a 26 percent stake in the company for $2.6 billion.

Via [BloomBerg]

Copyright © 2009 ProPakistani.com

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CM OF Sindh Summons Moot on Karachi Violence

Posted by Pakistan News on April 30th, 2009

KARACHI: Chief Minister Sindh Syed Qaim Ali Shah has summoned an emergency moot of all the stakeholders in the government to discuss recent violence in the city, reported ARY OneWorld.

Violence continued in Karachi throughout last night

Posted by Pakistan News on April 30th, 2009

Violence which started in Karachi Wednesday evening continued throughout the last night during which a number of hotels, shops and vehicles were set ablaze.

Girls School Blown Up in Bannu

Posted by Pakistan News on April 30th, 2009

BANNU: Another girls school blew up with explosives by militants in Bannu. Police sources told Geo News that unknown militants planted explosives in the building of Government Girls High School Ataullah Noor that went off with a bang on Thursday morning.

Troops Patrol Karachi After Karachi Violence

Posted by Pakistan News on April 30th, 2009

Paramilitary troops patrolled Karachi on Thursday, with orders to 'shoot on sight' violent troublemakers a day after at least 24 people were killed in ethnic clashes in the city.

Officials: Shootouts Leave 20 Dead In Pakistan

Posted by Pakistan News on April 30th, 2009

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Wi-tribe Soft-Launch Tomorrow (1st May)

Posted by ProPakistani on April 30th, 2009


Wi-tribe is launching its service as a soft launch on May Day in two cities i.e. Lahore & Karachi. People can get the CPEs in these two cities from their company outlets operating in both these cities.

Soft Launch basic purpose is to test the system (Billing especially). The commercial launch will be there afterwards once the testing gets completed.

Copyright © 2009 ProPakistani.com

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