Adjustment of LDI License Tariffs by PTA in Response to Rupee Depreciation and Elevated Interest Rates

The Pakistan Telecommunication Authority (PTA) is considering revising the Long Distance & International (LDI) license template due to challenges faced by the telecom sector. Factors such as the devaluation of the local currency and high-interest rates have increased capital and operating costs, impacting the business cases and profit margins of the industry. The PTA, empowered by the Pakistan Telecommunication (Re-organization) Act, 1996, has the authority to grant and renew licenses, specifying fees accordingly.

In 2022, the PTA revised the LDI license template, including a roll-out obligation of deploying 1500kms with a Performance Bank Guarantee (PBG). However, given the transformed business landscape and financial implications, the PTA is now conducting another consultation to address concerns raised by telecom licensees. Issues for consultation include the linkage of PBG to the roll-out obligation, rollout methodologies for laying 1500 km of optical fiber cable (OFC), and the addition of any other “Technical & Financial Plan” under the license.

Despite the challenges, the PTA emphasizes the need for the proliferation of OFC networks and the expansion of a resilient fixed-line network to meet the growing demands of the telecom sector. In 2023, the PTA approved five new LDI licenses, and there are currently no pending LDI license applications. The consultation aims to evaluate and potentially modify the existing license template in response to industry concerns.