ISLAMABAD: Pakistan’s telecom sector is once again under scrutiny as revelations of massive financial irregularities involving leading telecom operators Jazz, Zong, and PTCL have reached the Senate for investigation. The Senate Standing Committee on Information Technology and Telecommunication has called an urgent meeting on August 25 to probe these issues, following the release of an audit report highlighting billions of rupees in losses to the national exchequer due to overcharging and illegal spectrum usage.
The controversy first surfaced when it was revealed that Jazz, Pakistan’s largest telecom operator, had overcharged its subscribers by approximately Rs6.8 billion. This prompted a deeper investigation into the entire telecom sector, with the Auditor General of Pakistan (AGP) identifying similar irregular practices by other operators, including Zong and PTCL.
According to the audit report on public sector organizations within the telecommunication sector for the fiscal year 2024-25, the national treasury suffered a massive loss of Rs18 billion due to the illegal use of additional frequency spectrum by China Mobile Pakistan (Zong). The issue dates back to 2007 when the Frequency Allocation Board (FAB) temporarily allocated Zong a compensatory frequency to mitigate cross-border interference from Indian CDMA networks that disrupted services in Punjab and Sindh. Initially approved for a one-year period, the allocation was extended multiple times, first for three years and eventually until October 2019, coinciding with the expiry of Zong’s 2G license.
However, the audit revealed that Zong continued to use the frequency long after its license had expired. FAB’s monitoring reports from September 2024 confirmed that Zong had been using the temporary spectrum for LTE (4G) services as early as 2014, and beyond the designated border areas.
In 2020, the Pakistan Telecommunication Authority (PTA) issued an enforcement order directing Zong to vacate the frequency and pay charges for its illegal use. Based on a government policy directive from May 2019, these charges were calculated at a rate of US$29.5 million per MHz. The total recoverable amount for spectrum usage from October 2019 to October 2024 was Rs18,042.2 million. Despite this, Zong failed to vacate the spectrum or pay the dues, and despite the Islamabad High Court dismissing Zong’s related petitions with costs on August 21, 2024, no progress has been made.
The audit report emphasized that Zong’s continued use of the spectrum beyond the expiry of its license not only violated regulatory requirements but also resulted in significant financial losses for the national exchequer. The report stated, “Audit contends that the illegal use of spectrum by M/s CM Pak (Zong) beyond the expiry of its license not only violates regulatory requirements but also results in significant financial loss to the national exchequer.”
When confronted, Zong’s management clarified that it had challenged the High Court’s decision in the Supreme Court of Pakistan and later signed a new license agreement with the PTA in October 2024, in compliance with the Supreme Court’s orders. Extensive negotiations took place between the regulator and the company, but no consensus was reached on the recoverable dues. The issue was presented to the Departmental Accounts Committee (DAC) on December 27, 2024, which directed FAB to vigorously pursue the matter in court. However, no meaningful progress was recorded until the audit report’s finalization.
The audit also highlighted similar issues in earlier reports for 2015-16, 2017-18, and 2019-20, with a cumulative financial impact of Rs53.5 billion. This recurrence of violations raises serious concerns regarding regulatory enforcement in the telecom sector.
Furthermore, the audit pointed out that PTA had failed to recover Rs40 million in annual regulatory dues from various telecom operators, with PTCL alone owing Rs37 million. This failure reflects weak receivables management and poor enforcement of financial discipline.
The audit also criticized the management of the Universal Service Fund (USF) Company under the Ministry of IT and Telecom, especially regarding projects awarded to PTCL. One of the major issues highlighted was the delayed completion of the Balochistan Package-2 project. Originally due for completion in October 2010, the project was delayed by an extraordinary 2,929 days, with PTCL submitting the fourth milestone in January 2020. In September 2023, USF instructed PTCL to pay over Rs624 million for liquidated damages, but the company failed to comply and pursued litigation instead.
Another project, a 2023 agreement between USF and PTCL worth Rs43.2 million, aimed to connect underserved areas in Quetta district. The audit report indicated that the project was awarded to PTCL in violation of the Request for Application requirements, lacking proper planning and assessment.
Additionally, PTCL has repeatedly refused to produce its financial records for audit, despite clear instructions from the Supreme Court, the Public Accounts Committee (PAC), and the Auditor General’s Office. This refusal to comply has raised further concerns about transparency and accountability within the sector.
These revelations underscore deep systemic issues in regulatory enforcement, weak financial recoveries, and recurring irregularities that have plagued Pakistan’s telecom sector for over a decade. The fact that these issues have persisted across multiple audit reports without resolution raises questions about the will of regulators, government oversight, and the influence of powerful telecom operators. As the Senate Standing Committee now takes up the matter, industry insiders and policymakers are keenly watching to see if this latest parliamentary intervention will bring accountability to a sector crucial to Pakistan’s digital economy.
