The CEO of Telenor Pakistan has said the operator will think again about participating in the country’s 3G spectrum auction, blaming the government for introducing tax increases and greater regulatory costs.

Lars Christian Iuel (pictured) told Express Tribune about his disquiet over a five per cent increase in the withholding tax imposed on cellular services, as well as the Pakistan government’s decision to increase the amount it wants to raise from the forthcoming auction by 50 per cent to $1.2 billion.

He also complained about the government’s decision to take control of the country’s universal services fund (USF), which builds infrastructure in Pakistan’s rural areas.

The threat is a surprise given Telenor is established as one of the country’s incumbent operators with 30.8 million subscribers (Q1, 2013, GSMA Intelligence figures).

However, Iuel expressed his frustration at the impact of the country’s tax regime: “I understand that the tax base has to increase, but we would rather see an expanded tax base rather than the greatening burdening of industry and individuals who are already taxed.”

The government has increased the withholding tax rate from 10 per cent to 15 per cent in the budget for the current financial year, in addition to a 19.5 per cent federal excise duty that mobile subscribers must pay.

Iuel was also sceptical about the government’s aim to raise $1.2 billion from the 3G auction, given so much revenue is being taken from operators in taxes.

He noted that Telenor has been prepared to pull out of auctions in other countries where it thought the price was too high.

He also expressed concern that the government had taken control of the USF away from the telecoms industry, a move which would be in breach of the country’s Telecom Act, he said.