Telenor May Drop Out of Pakistan's 3G License Auction

Telenor May Drop Out of Pakistan's 3G License Auction

Telenor has warned that it is reconsidering its participation in Pakistan's 3G license auction following recent tax rises and regulatory changes.

The government recently raised telecoms taxes by 5 percent, and lifted the 3G license expectations from US$800 million to US$1.2 billion.

Telenor Pakistan's CEO, Lars Christian Iuel told The Express Tribune that mobile service providers "are not money-making machines."

The government has increased the withholding tax rate to 15% -- from 10%, and this is in addition to the 19.5% federal excise duty that customers pay.

"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 added.

He also said that the expectation that the government will raise US$1.2 billion from the 3G license auction was wishful thinking, warning that rising taxes is reducing the value of the licenses to the bidders.

He warned that the company has dropped out of bidding before in other countries when the regulatory and tax regime was unfavourable.

"If viable business terms are not put in place on the auction of 3G then we will invest somewhere else," he warned.

On the web: The Express Tribune