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Unjustified increase in PTCL tariff



Unjustified increase in PTCL tariff

In last few years monthly line rent has registered a six-fold increase

Jan-14 - 20, 2002

The disinvestment-bound Pakistan Telecommunication Company Limited (PTCL) has once again announced to increase its monthly line rental charge to aggravate an already unsatisfied customers. While the PTCL has also announced to slash installation charges on new fixed line telephones, on which it enjoys the absolute monopoly, the move is aimed at ensuring an immense increase in its revenue at the cost of the subscribers.

The manner in which the PTCL has chosen to announce the increase is also extremely evasive. While it has announced to increase the monthly line rent by just Rs 18 to Rs 300, it conveniently remains silent whether it is, or not, inclusive of the 15 per cent Central Excise Duty (CED). As is, the previous line rent of Rs 282 which the PTCL has chosen to use as its base for announcing the 'small increase' comprised Rs 245 in rental fee and Rs 36.75 in 15 per cent CED the total of which was rounded off to Rs 282. The silence on the part of the PTCL to clarify if the new line rental charge is inclusive of the CED or not is seen by many as an indication that 15 per cent CED is not part of the increase.

This means that the increase in monthly line rent would cost the subscribers much more than the PTCL has made them believe. It means that the subscribers have to digger much deeper in their pockets to adjust the additional monthly billing which would not be Rs 18 as announced by the PTCL but Rs 63 the difference between previous monthly line rent of all inclusive Rs 282 and Rs 345, 300 line rent plus Rs 45 being 15 per cent CED.

The decision to increase the line rental for highly inefficient services such as incessant closures of telephones with no recourse to subscribers, highly erratic wrong billing, noexistence of directory services even at a cost, inaudible voice transmission, etc only months prior to PTCL's disinvestments shows that subscribers are being milked for distinct reasons. Number one, it is aimed to earn top price for the 20-26 per cent shares to the successful bidder. And number two, to provide the successful buyer a pretext to keep charging the subscribers high telephone charges even after PTCL's privatization. Could there be a worse way to make the undermine one of the globally accepted objective of the deregulation of the telecom industry a fair and free competition for the benefit of the subscribers.

It is easy to see that the PTCL has successfully blocked any real competition even after its disinvestments by providing the successful buyer the pretext to justify the high line rental fee. The real looser of the expected high price for the disinvetment, the Privatization Commission is expecting to collect between $ 700 million to $ 900 million from the disinvestment of 20-26 per cent shares would be the subscribers in both short and the long terms.

Addition revenue

Let us see the volume of additional revenue PTCL would be able to make by milking an already milked subscribers in last few years monthly line rent has registered a six-fold increase, a five-minute metering has been slapped on local calls. Number of operational fixed lines increased by 250,000 to a total of 3.3 million during 2000-2001.

Let's calculate the additional revenue that the PTCL would be able to make on the basis of both the imminent increases in the monthly line rent Rs 18 as announced by the PTCL and Rs 63 which it has chosen to remain evasive about. An increase of the line rent by Rs 18 based on 3.3 million lines translates into an additional revenue of Rs 59.4 million monthly or a cool Rs 712.8 million annually. On the other hand, a Rs 63 increase in the monthly line rental means Rs 207.9 million a month or an even more cooler Rs 2.5 billion a year.

PTCL which is churning out record profit and revenue year after year (for the year ended June 30, 2001 it earned a net profit of Rs 18 billion and record revenue of Rs 62.04 billion) has once again managed to ensure earning envious additional profit this year despite an overall deterioration in all spheres of its work be it infrastructure and highly inefficient staff and workers indifferent to the needs and complaints of the subscribers.

Instead of milking the customers to better an already record profits year after year, the PTCL should have given priority to recover huge trade debts, both domestic and foreign, to prove that it deserves the profit. According to PTCL's annual reports, the trade debts increased by 40 per cent from Rs 22.5 billion in 1997-98 to Rs 31.39 billion in 1999-2000 of which Rs 13.3 billion were considered 'doubtful' or in plain language unrecoverable.

The PTCL also announced recently of starting a campaign to recover huge bills from the defaulters in the federal and the provincial governments. Not surprisingly, the PTCL has been conveniently sleeping over the years and has only woke up to recover these dues which certainly could not had been accumulated over a night, or a month or even years.