KARACHI, July 20: The outflow of foreign exchange for import of mobile phones and other apparatus has almost neutralised the impact of foreign investment made in the telecommunication sector in the last fiscal year.

The import bill of mobile phones witnessed an 18 per cent increase to $670 million due to rising demand of cellphones during the 2006-07. The overall imports of the telecommunication sector surged by 13 per cent to $1.347bn, the highest among the machinery group, during the year under review.

The telecom sector during the first 11 months (July-May) of 2006-07 had attracted a foreign investment of $1.482 billion, which was highest among other sectors.

However, the balance sheet of import bill and investment (inflows $1.347bn and outflows $1.482bn) showed neutral impact of foreign inflows in this sector. It had been claimed by the government that the huge foreign investment was made in the telecom sector but never discussed the overall impact of this investment on the sector.

The telecom sector witnessed the highest growth in the country and the government estimated that the growth in mobile phone sector would continue with the same pace at least till 2010.

The roaring business of mobile phones had created massive economic activity and a government official said that the sector had been contributing strongly towards achieving high economic growth.

The official estimates showed that the sector’s share in GDP stood at two per cent which is expected to be surged to three per cent in the next three to four years.

The number of cellular phone subscribers in the country has crossed the 50 million mark with over 1.5 million new users are joining each month.

The Chairman Pakistan Telecommunication Authority (PTA) early this year had endorsed the figure of 1.5 million subscribers’ growth each month. The number of telephone lines available to each hundred persons (overall teledensity) rose to 35.40 per cent in December 2006 from just 3.66 in 2001-02. Similarly, mobile phone density has reached to 32.66 in January 2007.

However, in terms of foreign exchange, the country did not get the benefit as it was witnessed in power sector, oil exploration and banking sector. The outflows from these sectors were much lower than the telecommunication sector.

Analysts said that the growth in the mobile phone imports would continue offsetting the impact of foreign investment in this sector.

They said the foreign investment in this sector would slowdown in the next couple of years as significant number of foreign companies had already captured the maximum market.

A sector analyst said that a few telecom companies were trying to slash their operations by selling a part of their shares to other companies reflecting the low possibility of investment in the telecom sector.