The Pakistan Telecommunication Authority (PTA) is requesting that mobile phone operators pay an annual regulatory charge for the profits they generate from the sale of mobile financial services through their partners (financial institutions).
ProPakistani was able to obtain a copy of an order from PTA asking operators to provide the regulator with transactional information regarding their mobile financial services (MFS) operations and any financial results so it may charge the operators the agreed-upon annual regulatory fee.
In the past, telcos have resisted PTA’s request for payment, arguing that since MFS services are not licenced services, no yearly charge should be assessed.
It is important to note that all mobile phone providers are required to contribute 1.5 percent of their gross yearly income to the Universal Service Fund and an additional 0.5 percent of their gross annual revenue as an annual licencing fee to the R&D Fund.
Telcos had argued that since mobile banking services are not considered licenced services, these 1.5 percent and an additional 0.5 percent yearly contributions shouldn’t be applied. The PTA, however, dismissed the telcos’ argument in an order.
The regulator has decided that MFS services provided by telecoms through their partners will be subject to the same fees as other licenced services following various hearings and consultation processes (such as telephony, internet, VAS, etc.).
In its order, PTA stated that since mobile phone operators give their partner financial institutions (typically banks, EMIs, and microfinance banks) the necessary connectivity and technical support, revenues from mobile banking services will be taxed similarly to those from other licenced services. PTA also requested that mobile phone operators provide transactional information for their mobile banking operations. The MFS services annual levy may be in the billions of rupees.
The Islamabad High Court rejected a telcos’ appeal seeking relief from the yearly fee on MFS, therefore it is appropriate to highlight here that telecoms had previously used up their legal options to challenge this judgement.