Pakistan’s telecom sector suffered a sharp decline in foreign direct investment (FDI), losing nearly $1 billion in just one year. According to a July 2025 report by the Asian Development Bank (ADB), FDI in the sector fell from $1.67 billion in 2021–22 to just $750 million in 2022–23.
This steep drop reflects mounting investor concerns over the country’s digital infrastructure environment, which is plagued by high taxes, inefficient spectrum allocation, low fiber penetration, and unpredictable regulatory policies. Despite continued growth in mobile internet use—with over 138 million mobile broadband users by late 2024—the overall investment climate has deteriorated, worsened by Pakistan’s broader economic instability.
Fixed broadband penetration remains extremely low at 1.3%, and only 14.8% of mobile towers are fiber-connected. This shortfall hampers efforts to meet rising data demand and delays progress toward 5G deployment. While the telecom sector has contributed more than PRs1.28 trillion to the national treasury over the past five years, the report notes that long-term investment in infrastructure has not followed.
The ADB warns that without urgent reforms, the sector risks falling short of its potential as a driver of digital transformation and economic growth.
“The telecom sector in Pakistan has experienced a decline in revenues and foreign investment, which reflects a very challenging business environment,” the report states.
One major barrier identified is Pakistan’s spectrum auction framework. High reserve prices—set in U.S. dollars—often discourage participation from private operators, stalling the rollout of next-generation technologies.
“The spectrum auction starting prices and commercial conditions need to be reasonable and attractive for operators,” the ADB noted. “This would enable the timely, cost-effective launch of 5G and foster innovation in the digital economy.”
The report also highlights excessive taxation from both federal and provincial authorities, ranking among the highest globally for the telecom sector. Additionally, Pakistan’s annual right-of-way (RoW) charges further strain operators—unlike in countries like India, where such fees are minimal and charged only once.
To reverse the investment decline, the ADB recommends several reforms: implementing a stable long-term tax policy, revising spectrum pricing models, and establishing a unified national RoW framework. It also suggests deeper collaboration with provincial governments to create anchor demand for fiber connectivity in schools, hospitals, and other public institutions across smaller cities.
The ADB stresses that telecom should be seen not just as a commercial enterprise, but as critical infrastructure for the country’s digital future. Without prompt and coordinated action, it warns, Pakistan risks increasing digital inequality and falling behind in global competitiveness.
“Pakistan’s digital infrastructure is dragging down its overall digital readiness and economic performance,” the report concludes.