Telenor threatens to quit Pakistan’s 3G auction: report

Norway’s Telenor says it might withdraw from Pakistan’s upcoming auction for 3G spectrum licenses following a government decision to increase taxes imposed on telecom operators in the country, reports The Express Tribune.

In an interview with the publication, Lars Christian Luel, the chief executive of Telenor (Fornebu, Norway), attacked the targeting of the telecoms industry by tax collectors, saying operators are not “money-making machines”.

Norway’s Telenor says it might withdraw from Pakistan’s upcoming auction for 3G spectrum licenses following a government decision to increase taxes imposed on telecom operators in the country, reports The Express Tribune.

In an interview with the publication, Lars Christian Luel, the chief executive of Telenor (Fornebu, Norway), attacked the targeting of the telecoms industry by tax collectors, saying operators are not “money-making machines”.

Authorities recently increased the withholding tax rate to 15% from 10% previously, and Luel believes the government should look at expanding the tax base instead of squeezing more out of existing payers.

The government has also revised its estimates of what the auction could fetch in proceeds to $1.2 billion from $800 million.

In his interview with The Express Tribune, Luel described this as “wishful thinking” in light of the increased taxes and strict regulations being imposed on operators.

Having already withdrawn from previous auctions in similar circumstances, Telenor is reportedly prepared to pull out of the Pakistan process unless taxes are lowered or regulations eased.

“Regulations like issuing only five SIM cards against one Computerized National Identity Card has limited the prospects for business expansion,” he is quoted as saying.

“If we start limiting the number of SIM cards that can be issued, it will weaken my business case for 3G.”

Luel is said to have expressed his misgivings to Pakistan’s information technology minister and minister for finance but reckon every time he attends a meeting with authorities he “comes out worse off”.

Telenor is one of Pakistan’s biggest mobile operators, serving more than 30 million customers in the country, and its withdrawal from the 3G auction process could seriously threaten the government’s revenue targets.