Pakistan's Telecom Boom Continues

Telecom sector is attracting the largest share of foreign direct investment in Pakistan. Foreign investors pumped in $364m into it during July-Sept 2007 quarter, according to the latest figures released by Pakistan Telecommunications Authority. The total FDI in Pakistan for this 3-month period was $962.5m.
The number of cellular subscribers in Pakistan has crossed 76m in Dec, 2007, from 500,000 in 2004. According to Business Recorder, Pakistan's financial daily, most forecasters believe that the upward trend will continue in the next 5 years because of the huge market potential, particularly in the rural areas where the build-out has yet to happen. Opreators such as Wateen (with Motorola) are planning a large Wimax roll-out to improve voice and high bandwidth data access across the country. The biggest mobile operators in Pakistan include Mobilink with 30m subscribers, Ufone with 16m, Telenor with 14m, Warid with 13m and Paktel with 1m.
It must be noted that FDI is different from stock market investments. FDI money goes to build factories, infrastructure and facilities rather than the purchase of financial assets such as stocks and bonds by mutual funds.
According to Pakistan's Daily Times, Pakistan’ telecom boom has created more than 300,000 jobs in the telecom sector. This has resulted in huge demand for professional and capable telecom workforce that can expertly meet the new age requirements of these positions. Creative public private partnerships are being established to meet this demand.



Thanks to Pakistanis' rising incomes, which have more than doubled to over US$900 per year in the last seven years, and increased competition, the teledensity rate is expected to go over 50 percent in the next couple of years, according to officials and analysts. Opportunities such as these are fueling the continuing growth in the middle class which further enhances the ongoing consumer boom. By various estimates, the Pakistani middle class has now grown to over 30m people, about 20% of the total population. The size of this middle class makes Pakistan an attractive opportunity for investors, in spite of the continuing political uncertainty with the approaching elections in February, 2008. Analysts such as Merrill Lynch's Chief Market strategist Mark Matthews are very bullish on Pakistan. Matthews has called Pakistan a "safe haven" for investors as recently as Jan 6, 2008 in an interview with CNBC.

Comments

Riaz Haq said…
Here's a report on Wi-tribe's broadband launch in Pakistan:

Wi-tribe, a wireless internet provider backed by Qatar’s Qtel Group, has launched a wireless broadband service in Pakistan. The deployment, which uses WiMAX technology from Motorola, covers major cities of Karachi, Islamabad, Lahore, and Rawalpindi.

Sheikh Abdullah Bin Mohammed Bin Saud Al-Thani, chairman of Qtel Group, said the launch, which is Wi-tribe’s biggest project to date, marks an important stage in the company’s aim to become a top 20 telecom player by 2020.

“Following our launch in Jordan, Pakistan marks a major stepping stone towards our expansion strategy and our intention to leverage the scale and strengths of the Qtel Group in order to deliver the latest technologies to our customers,” he said.

Dr Nasser Marafih, CEO Qtel, added that broadband represents a “major pillar of growth” for the company, particularly in markets which have low broadband penetration rates, such as Jordan and Pakistan.

“Broadband penetration levels in new emerging markets are currently very low compared to markets in the region. However, consumer demand for wireless services is growing at a fast pace. So we will continue to focus on this area in the future as we see good business opportunity and significant growth potential,” he said.

While Pakistan already has about 50 ISPs, services are limited outside metropolitan areas. Access to high speed broadband and mobile broadband is also limited.

As of February 2008, Pakistan had about 100,000 broadband users, although the government has set itself a target to increase this number to 1.6 million by 2010.

Qtel entered Pakistan in April 2007 when it acquired a 75% stake in wireless telecoms operator Burraq Telecom, in a joint deal with and Saudi Arabia's A.A. Turki for Trading and Contracting.
Riaz Haq said…
According the LIRNEasia’s 2011 Telecom Regulatory Environment (TRE) survey, stakeholders in India, Pakistan and Indonesia have identified the telecom regulatory environments in their countries as improved since 2008, the last time the survey was carried out. In contrast, Bangladesh, Sri Lanka, the Philippines have seen the regulatory environments decline in effectiveness, while Thailandremains more-or-less the same.

The TRE Survey asks senior level stakeholders to evaluate the effectiveness of the telecom regulatory environment in the fixed, mobile and broadband subsectors along a Lickert scale of 1 to 5 (1 being highly ineffective and 5 being highly effective, with the mid-point of 3 being considered average performance). Seven different dimensions of regulation (market entry, tariff regulation, interconnection, universal service, anti-competitive-practices, quality of service) are evaluated by the stakeholders. This year, 349 responded participated in the 7 countries.

Within a country, scores for each of the dimensions reflect specific issues: for example, in India, the lowest score (of 2.3 out of 5) was received by the Access to Scarce Resources dimension in the mobile-sub-sector. This is perhaps not surprising given the 2G scandals in India. However, India did finally get around to allocating 3G spectrum in 2010, and did so by having its first ever spectrum auctions. Perhaps because of this, or because stakeholders believe that that the 2G scandal has finally paved way for transparency in allocation, the score of 2.3 this year is still an improvement, though marginal, over the 2008 score of 2.2. India’s USD 4 billion+ undisbursed Universal Service Fund and related policies are responsible for its biggest TRE score decline: the TRE for USO drops from 3.1 in 2008 to 2.4 this year. In contrast, tariff regulation in the mobile sub-sector continues to be the top performer with a score of 3.9 out of 5.0, indicating stakeholder satisfaction at TRAI’s policy of forbearance which has enabled Indian consumers to enjoy extremely low prices thanks to competitive forces.

Pakistan saw an increased in almost all dimensions, with the exception of 3 (fixed market entry, mobile access to scarce resources and mobile interconnection) which showed minor declines. In contrast, Bangladesh saw scores in all seven fixed-subsector dimensions decline, in some cases by as much as 1 point. The scores are perhaps reflective of the issues related to the cancellation of several fixed licenses. Overall only seven dimensions showed improvements in Bangladesh, and even these were marginal. Thailand, whose overall performance is unchanged, has however seen significant declines in its Market Entry scores due the uncertainties caused by the concession contracts granted to the mobile operators and what their status would be when they expire starting next year.

http://lirneasia.net/2011/07/india-pakistan-and-indonesia-have-improved-telecom-regulatory-environments-since-2008-according-to-stakeholders/
Riaz Haq said…
Here's an excerpt from "Back to Pakistan" by Leslie Noyes Mass talking about the extensive telecom coverage in remote Northern areas of Pakistan:

"The Eagles Nest is aptly named: it perches on top of a ridge amid rocky scree and jagged peaks. Behind us are 24000-feet snowcapped summits, soaring into the sky. Below, the valley where we have spent the past few days is recognizable by its row of cell phone towers and the Hunza River. I have been astonished that, remote as we are in Hunza, first-class cell phone and Internet connections are available 24/7. We are as close to civilization as the briefest click and as far away the loosest stone on that crumbling highway north or south."

http://books.google.com/books?id=_BtWtuLlDXoC&pg=PA44&lpg=PA44&dq=inquiry+based+learning+pakistan&source=bl&ots=6DRcWG5-r7&sig=7_vsfOS2Xet_zFFmqRmduY-hR24&hl=en&sa=X&ei=6rEHT93tEeqFiAKO_aWyCQ&sqi=2&ved=0CFEQ6AEwBQ#v=onepage&q=cell%20towers&f=false

The highway Mass is referring to is the world's highest called Karakoram Highway at an altitude of over 15000 feet. It's currently being repaired and expanded with Chinese help. Talking about it, she writes:

"I wonder what a wide, asphalt highway would do to this area--bring more tourists and trade and change forever the lives of the people in the distant villages hidden among the rocks, I imagine."
Riaz Haq said…
Here's a Nation report on Telenor's growing business:

Telenor Pakistan posted record quarterly revenue of Rs 23 billion according to the latest figures released by the Telenor Group, says a press release. It added 615,000 subscriptions during April-June, ending with 29.9 million subscribers, a growth of 12pc over the same quarter last year. The company’s EBITDA margin observed an impressive YoY growth of 26pc, while market share remained stable at 24pc.Chief Executive Officer Lars Christian Iuel, speaking about the solid quarter figures, said: “I am pleased with the performance of Telenor Pakistan in the second quarter of 2012. Despite operating in a challenging business environment, we have posted strong results, which are a testament of our employees’ hard work and unrelenting dedication.” During the second quarter of the year, Telenor Pakistan launched the second phase of its mobile phone application development project Djuice Opportunity. The company also joined hands with the Government of Punjab and AJK for provision of information service via SMS to farmers.Also in the reporting period, Telenor Talkshawk Internet Champion– a knowledge-based initiative to help empower digital generation in Pakistan– was concluded in AJK, whereas it is currently underway in Punjab. Overall, Telenor Group reported revenues of NOK 25.4 billion, representing an organic revenue growth of 5%. EBITDA before other items was NOK eight billion, EBITDA margin was 31.7% and operating cash flow was NOK 5.1billion. With five million new customers added in the period, Telenor’s total subscription base has now passed 150 million.

http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/26-Jul-2012/telenor-pakistan-continues-to-perform-well-in-q2-2012
Riaz Haq said…
Here's a Telecom report on increasing mobile subscriber base i Pakistan:

The number of mobile customers in Pakistan grew to 123.60 million in November last year, up from 121.60 million in October 2012, while mobile teledensity inched up to 69.8 percent fro 68.8 percent, according to figures from the Pakistan Telecommunication Authority (PTA). Mobilink led the market with 36.60 million subscribers, up from 36.39 million a month earlier, followed by Telenor which had 30.81 million subscribers, compared with 30.43 million in October. Ufone's subscriber base grew to 24.31 million from 24.07 million, and Zong ended the month with 18.93 million customers, up from 17.95 million in October. Warid had 12.94 million subscribers in November compared with 12.76 million in the prior month.

http://www.telecompaper.com/news/pakistans-mobile-base-reaches-12360-mln-in-november--920582
Riaz Haq said…
Here's Silicon Republic report on the future expansion of mobile telecom:

Emerging markets will be the key source of future mobile communications growth with 1.6bn new connections coming from around the world, out of which 61pc of these will come from Asia.

At the Mobile World Congress in Barcelona, Nokia CEO Stephen Elop said that bringing the next 1bn users online will be a major disruptive force for the industry. He unveiled the new Nokia 105 device, the first full colour device with internet and email connectivity that will cost less than US$15.

Elop said: “We believe that the next 1bn people are very young and very ambitious. For the very first time they are able to afford their own mobile phone, it is not a device they have to share with their family or the village. It’s their own.”

Manoj Kohli, the CEO of India-headquartered Bharti Airtel, the third largest mobile operator in the world with 261m subscribers in 20 countries, said that for every 10pc increase in broadband penetration in a developing country there is a 1pc increase in GDP.

He said there is a need for mobile devices that cost less than US$30 and mobile broadband dongles that cost less than US$10.

At the Mobile World Congress browser creator Mozilla revealed its Firefox OS that will be included on devices from LG, Huawei, Alcatel and ZTE to bring affordable smartphones into the hands of consumers in developing markets. Operators from America Movil, China Unicom, Deutsche Telekom, Etilisat, Hutchison Three, KDDI, KT, MegaFon, Qtel, SingTel, Smart, Sprint, Telecom Italia, Telefónica, Telenor, TMN and VimpelCom have undertaken to carry smartphone devices from the various mobile manufacturers who have committed to the new Firefox OS.

According to the GSMA, there are 3.4bn people on the planet today connected by mobile devices and this will grow to 3.9bn by 2017.

4G LTE will account for one in five connections in the world versus one out of every 25 in 2012.

The GSMA estimates that the industry is expected to spend US$1.1trn on capex in the next five years and will add 1.3m jobs around the world. The mobile industry’s contribution to global GDP between 2013 and 2017 as a result of its investment is expected to add up to US$10.5trn
----------
“Ovum forecasts that emerging markets will be the key source of future mobile connections growth, particularly in Africa and Asia-Pacific. Between 2012 and 2017, Ovum expects that there will be 1.6bn new mobile connections across the world, with 61pc of these coming from Asia-Pacific.

“While connections growth in Asia-Pacific will begin to slow towards the end of our forecast period, the region’s 4.4bn connections in 2017 will make it the greatest contributor to global connections. Growth in the Asia-Pacific region will largely be driven by the big three emerging markets of China, India, and Indonesia, which will have 3bn connections between them in 2017.

“While Asia-Pacific will generate the most new connections, Africa will be the fastest-growing region. African mobile connections will grow at a compound annual growth rate of 6.5pc between 2012 and 2017, increasing from 683m in 2012 to 935m in 2017.

“While connections growth is important, the biggest issue for emerging market operators will continue to be around revenue growth and how to remain profitable with a customer base of low-ARPU users.

“Both Nokia and Airtel’s CEOs talked about the need for cheaper devices. The strategies of operators in Vietnam, India, Pakistan, and Tanzania demonstrate how telcos can operate in markets where ARPU is below US$3 per month.

“While the correlation between high ARPU and profitability is not absolute, operators still need to take action to improve the amount of revenue that they make from each connection. This is of paramount importance to operators in markets where ARPU will be less than US$5 per month in 2017,” Pawsey said.


http://www.siliconrepublic.com/comms/item/31667-next-1bn-users-central-to/
Riaz Haq said…
Here's a Techinasia report on Telenor's planned investment in Pakistan:

Norwegian telecom group Telenor will invest $1.7 billion in Pakistan after acquiring a 3G spectrum, reports Propakistani. The massive investment, announced by Telenor CEO Jon Fredrik Baksaas at a recent meeting with members of the Pakistan media, should have a large impact on the country; Baksass predicts that it will increase internet penetration and, by extension, the country’s GDP.

This new investment should be a boon especially for rural people who may not have internet access, as $700 million of it is apparently earmarked for spreading 3G networks across the country. Baksaas reportedly said that he expects this rollout to have a greater impact on rural residents than urban residents.

This is not Telenor’s first foray into Pakistan, the company has already invested more than $2 billion there. That shouldn’t come as a large surprise given that the company is one of Pakistan’s largest telecom operators, with more than 30 million subscribers in the country


http://www.techinasia.com/telenor-invest-1-billion-pakistan-3g/
Riaz Haq said…
Here's an ET report on growing ICT use in Pakistan:

Pakistan has crossed a historical milestone. Elections were held on time, and for the first time in its 66-year history, a democratically elected government completed its term and handed over power to a new one. At the same time, the elections recorded a voter turnout unprecedented in recent years.
Much of this renewed political interest has been driven by Pakistan’s telecommunications revolution. Over 50 million voters verified their polling stations through their mobile phones and the elections were tweeted, blogged, and plastered across Facebook. In fact, the way I see it, the elections presented a major victory not only for Pakistan, but also placed a massive feather in the collective caps of telecom companies.

The Information Communication Technology (ICT) industry in Pakistan has registered a prolific boom in the last few years. With affordable pricing and 122 million connections showing mobile penetration at an all-time high, Pakistanis are amongst the highest SMS users in the world – the average Pakistani sends up to 178 text messages in a month.
And recent months have seen the launch of mobile financial services by various players, with transactions worth Rs3.76 billion via online banking already taken place.
Internet and broadband penetration is at a similar peak. According to World Bank statistics, by July 2012, Pakistan internet users showed a double-digit growth in the past five years and the Internet Service Providers Association of Pakistan (Ispak) estimates that internet users have reached 25 million thanks to broadband and mobile phone operators.
Moreover, thanks to large organisations such as PTCL and Wateen Telecom, over 250 towns and cities across the country are now connected through an extensive fibre optic network.
Universal Services Fund
The government also intends to use approximately $700 million available with the Universal Services Fund (USF) to further develop the infrastructure and network that has already been put in place. The USF’s aim to “improve the working of the Universal Services Fund (USF) and utilise its resources to bridge the rural-urban digital divide and establish WiFi hotspots” is certainly a welcome one.
---------
Smart grids
The auction of licences itself will give an impetus to the economy and provide the government with FDI. However, the regulatory body will need to rely on more than just consumer uptake in order to achieve the scale necessary for sustaining growth. This means formulating policies that encourage the uptake of data services by vertical industries, for example solutions for smart grids.
Indeed, smart grids should be a top priority for the new government – not only will they enable growth and scalability within the ICT sector, they will also provide significant value for the power and energy sectors.
Currently, there are several pilot projects under way using cellular technology, however, according to industry leaders, cellular solutions for smart grids are not scalable.
Moreover, utility companies require constant data streams on their networks for telemetry, oscillography, usage and meta-data. Data usage is rapidly increasing and demand is likely to increase once 3G services are introduced.
Telecom operators, on whom electricity distribution companies currently rely, will likely be in a challenging position in the next few years as demand on their networks grows for ambient video and other data-heavy services.


http://tribune.com.pk/story/570485/the-future-of-ict-in-pakistan/
Riaz Haq said…
Here's an ET story about Pakistan teledensity near 76%:

The country’s total mobile phone subscriptions reached an all-time high of 137.68 million at the end of April 2014, corresponding to a cellular mobile teledensity of 75.6% for the first time, according to the latest data released by the Pakistan Telecommunication Authority (PTA).
The PTA statistics revealed that each of the given cellular mobile operators (CMOs) were able to increase their subscriber base – collectively selling 1.2 million new connections in April 2014.
Telenor Pakistan and China Mobile (Zong) were once again the highest contributors to the growth of country’s mobile phone subscribers.
Telenor Pakistan sold 665,591 new connections during the month under review, taking its overall subscriber base to 35.87 million. The Pakistani arm of the Oslo-based cellular giant holds 26% share in the country’s cellular subscriber base, only two percentage points behind market leader Mobilink.
Mobilink maintained the top place, growing its subscriptions to 38.3 million after adding 145,941 new subscriptions to its network. Its share in the cellular segment is 28% as of April, 2014, the data revealed.
Zong, the Pakistani subsidiary of China Mobile, also continued its positive growth by selling 387,527 new connections in April and finished at number three with 25.98 million subscriptions. It now accounts for 19% of the country’s telecom subscriptions – just one percentage point above Ufone that slipped to number four with a market share of 18% or 24.6 million subscribers at the end of April, 2014. It sold only 2,435 new connections during the review period.
Warid Telecom, the smallest player in terms of subscriber base, sold 11,831 new connections and finished with a market share of 9% or 12.95 million subscriptions, according to the latest statistics.


http://tribune.com.pk/story/715949/breaking-records-cell-phone-subscriptions-soar-to-all-time-high/

Popular posts from this blog

China Sees Opportunity Where Others See Risk

Smartphones For Digital & Financial Inclusion in Pakistan

Economic Comparison Between Bangladesh & Pakistan