Jazz CEO Aamir Ibrahim sees Pakistan’s telecommunications sector as a ‘great equalizer’ if provided adequate government support
A few weeks back, Pakistan’s Information Technology Minister Syed Aminul Haq announced that the country’s Information and Communications Technology exports had risen to $1.298 billion in July-February of fiscal year 2020-21, a whopping 41 percent spike over the same period a year earlier. While a welcome development, this number is barely a fraction of what could be achieved if the Government of Pakistan were to invest in infrastructure that ensures uninterrupted and affordable broadband and cellular services to men and women nationwide.
In an interview with Newsweek Pakistan, Jazz CEO Aamir Ibrahim noted that no other sector of Pakistan’s economy had the potential to serve as an “equalizer” like telecommunications. “When we look at our government, they talk about agriculture, exports, textiles, because that is what we are aware of,” he says. “Nobody talks about the new economy” being developed right in front of our eyes, he adds.
That “new” economy is the rise of e-commerce, a sector that the incumbent government of the Pakistan Tehreek-e-Insaf has repeatedly hailed as one that is gaining momentum—even as policymaking lags in providing the kind of infrastructure that would enable it to soar to new heights. “Nobody talks about e-commerce, the potential for e-payments … our decision-makers and stakeholders are still thinking about Industry 3.0, whereas the fourth industrial revolution is passing us by,” says Ibrahim, pointing to the large numbers of Pakistanis who own mobile phones but have yet to fully appreciate their entrepreneurial advantages.
According to the Pakistan Telecommunications Authority (PTA), there are currently around 183 million cellular mobile subscribers nationwide. Of these, roughly 70 million are Jazz customers, making it the largest telecommunications company in the country. Despite this, says Ibrahim, around 15 percent of Pakistanis live in areas where there is no cellular coverage at all. “One of the reasons Pakistan lags behind other countries in terms of [cellular] penetration is that we have a significant population that still lives a somewhat nomadic existence,” he says, noting that in some rural areas, citizens lack roads, electricity and security necessary for infrastructure development making it difficult to achieve 100 percent coverage.
“However, we have made progress in the past 2-3 years, and I think our population coverage will go from 85% to 90% within the next 2-3 years,” he says, noting that this would mean that 90 percent of Pakistanis would have access to telecommunications services, which exceeds or matches the number who currently have access to electricity (90%); roads (88%); gas (48%); schools (66%) and hospitals (88%). To help reduce this digital divide, says Ibrahim, Jazz has partnered with the government’s Universal Service Fund, which promotes the development of telecommunication services in un-served and under-served areas throughout Pakistan.
But providing telecommunications services is only half the battle. According to the Jazz CEO, a greater issue is the low uptake of advanced services, such as 3G and 4G, which are currently utilized by nearly 100 million cellular subscribers in the country. “Around 40% of cellular consumers in Pakistan have subscribed to 4G,” he says of the broadband cellular network technology that offers faster internet and greater connectivity. This amount, he notes, is too low for the country to seriously consider the implementation of the even-more advanced 5G just yet. “I think it [5G] will come to Pakistan in the next 3 years as our 4G usage increases from 40 to around 70 percent,” he says, adding that there is a common misconception of seeing 5G as just a faster version of 4G. “Given our requirements, we can easily offer much faster internet even on 4G,” he says, noting that on average the 4G speeds in Pakistan max out at 10-11 Megabits/second even though the technology is capable of peaks of 100 MBPS. “The real benefit of 5G is going to come when you’re talking about autonomous vehicles, remote surgeries, connected devices and the internet of things,” he says.
For this, acknowledges Ibrahim, the barriers preventing more Pakistanis from utilizing 4G services must be examined. “One of the biggest barriers is of the device itself,” he says, noting that you can buy a 2G device for roughly Rs. 1,500 while a smartphone’s price starts at around Rs. 5,000. “That’s a significant gap. We need to work on the affordability of cellular devices,” he says, stressing that this gap adversely impacts nearly half of the country that struggles to make ends meet. Last year, Jazz proposed the PTA facilitate telecom companies in offering smartphones on easy installments to their customers, similar to how citizens purchase cars. With the market dominated by prepaid connections owned largely by an unbanked adult population, credit default risk is high. Fortunately, the regulator is giving this option serious consideration..
“Taxation has also been our Achilles’ Heel for a long time,” he says, noting that the sector is utilized as a “tax class,” as indirect taxes on all aspects of cellular services are imposed regardless of economic status. “These kinds of taxes tend to be controversial,” he says, adding that with GST of 19.5 percent and withholding taxes of 12.5 percent, consumers are being discouraged from seeking out pricier services such as 3G and 4G. “We recognize that we are in an awkward position as a country [financially], but people who earn less than Rs. 400,000-500,000/year should not be paying anything in withholding taxes,” he says, adding the high taxes on import of smartphones are also a barrier, as the government is essentially taxing a productivity tool.
“These kinds of questionable taxes don’t necessarily encourage a digital future for Pakistan,” he says. “The [tax] revenue will come if we increase the penetration and productivity. But we can’t tax both. We have to tax success,” he says.
With the government set to auction mobile telephony spectrum later this month, Ibrahim said it was unfortunate that despite having just four major operators, only about a third of the spectrum had been utilized thus far. “A spectrum is like a big highway. If you’re given a wider highway, you can put more cars on it or the cars can go at a faster speed,” he explains, adding that limited spectrum increases load on telecommunication towers, requiring greater investment on the towers themselves, and reducing a cellular network’s ability to boost broadband proliferation through cheaper tariffs. “This will help productivity and consequently increase the GDP of the country,” he says. “Broadband is the foundation layer of our future. Whether it is Ed tech, Fintech, e-commerce, education, everything relies on having a robust broadband,” he stresses, noting that data usage in Pakistan exploded by 272 percent between 2017 and 2021.
Another issue holding back the mass adoption of broadband, he admits, is social barriers. From men who don’t wish their wives, sisters or daughters to have smartphones to segments of society that are “anti-internet,” several factors need to be overcome. “We have to ensure the internet is safe and that you will not become ‘morally corrupt’ because you use it and you will not expose yourself to safety risks when you use it,” he says, noting features can be added to aid in this.
Similarly, he says, the low rates at which women register for personal SIMs is a matter of concern, as it means their connectivity is “controlled” by men. “We have to call out the taboos in our society. The likelihood of a girl owning a smartphone in Pakistan is a third of a boy. These are the things that really take us down as a country when we talk about digital divide or internet readiness,” he says.
The Economist Intelligence Unit recently placed Pakistan 90 out of 120 countries when it came to internet inclusiveness. While this designation is based on several factors, a key requirement is that the internet be equally available to everyone. “In Pakistan, we feel that it is less available to women than to men,” says the Jazz CEO, adding that of the company’s customers, only 22-24 percent of accounts are registered to women. “So the man [who registers] decides which tariff to use, which services and what phone to purchase,” he says, adding that this form of social imbalance must be called out to take Pakistan forward. “One of the ways to do that is to make sure women are included in every aspect of our customer orientation, our organization, and our approach to tackling the issues that face our society,” he adds.
Planning for the future
Key to inclusivity and equity in telecommunications, says Ibrahim, is a mid- to long-term plan ensuring all Pakistanis have access to mobile phones and internet facilities. “We need to debate how and why the digital sphere can be taken to a completely different paradigm-level than where we are now,” he says, noting this is something the government can take leadership of with officials who take full ownership of the agenda. “We are missing out on a lot of economic potential by just focusing on providing better 4G and believing the internet is merely useful for random searches,” he says.
Praising the incumbent government’s plans for a Digital Pakistan—initiated by Tania Aidrus who has since resigned—he recalled it had called for discussions around access, affordability, availability, relevance, digital skills. This would have yielded benefits across several industries, not just telecommunications. “Unfortunately [after Aidrus’ exit], there isn’t a whole lot of thinking around systematically creating a stamp, which enables e-governance,” he says, adding that this was one sector that Prime Minister Imran Khan could take personal ownership of, as otherwise no one else might. If the government can effectively implement a mission statement, he says, “We can transform people’s lives.”