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Cellular sector in Pakistan:
Achievements, challenges &the road ahead
Contents
Mobile Sector: a History
Contributions by Mobile Sector: Achievements
Challenges: More to come?
What lies ahead …
Background: the road to subscriber growth
‘90 ‘92 ‘98 ‘06‘05‘04‘03
Decision to convert erstwhile T&T to corporation (PTC)
Award of licenses to 2 Cellular Mobile operators
Granting of another GSM based Cellular Mobile license
Conversion of PTC into PTCL, creation of government operator NTC, Regulator PTA, Frequency Allocation Board (FAB)
Licenses granted to two new subsidiaries of PTCL namely PTML (4th Cellular Mobile Operator) and Paknet (ISP)
PTCL privatization process restarted
PTCL exclusivity for fixed line telecom sector terminated
Approval of Cellular Mobile Policy
Issuance of licenses to 2 new Cellular Mobile, 12 LDI, and more than 76 LL operators through open auction
Privatization of PTCL through selling of 26% strategic shares to Etisalat
Mobile Cellular Policy - 2004
Deregulation Policy – July ‘03
Key Highlights
Building communication infrastructure
91% of total population covered Cell sites: 26,300 (<2,000 in ‘04)
Amongst the fastest growing telecom markets
>90million subscribers (5m in ’04)
Cellular Tele-density: approaching 60% (3.29% in
’04)
Unprecedented Investment
Over $9b in FDI and continuing …
Highest by any sector
>30% of all total FDI in the past 5 year
Contributions to the Customer Accessibility
Widespread reach across Pakistan
Multiple Distribution Channels
Affordability
Handsets < Rs.1,000
One of lowest calling rates in the world
Connectivity & Convenience
24x7 support
99% on prepaid
…Contributions to the Customer
Product innovation
SMS, MMS, ring back tones, Information portal, call blocker, e-load,
Photo Express, Music services, Mobile TV, GPS tracking services, etc
Serving the underserved: USF Fund and roll outs …
Contributions to the Consumers
Contributions to the Economy
Spurring employment
Total eco-system provides employment to over 1m people
200K of them highly skilled
12K of them directly with CMTO’s
Part time students (Call Centers)
Increase in productivity
Communication infrastructure
Secondary growth effect on other industries
Banking, media, construction
Efficient Tax Collector
More than Rs. 120b annually
6% of total taxes collected by FBR
GST, withholding tax, income tax
Universal Service Fund Contribution:
Approximately PKR. 11 billion
R&D Fund Contributions:
Approximately PKR. 4 billion
Contributions to the National Exchequer
Contribution to the Community
Considerations for social, ethical & environmental
impact of products
Exemplary leadership and response to national challenges
2005 Earth quake relief
IDP Support
Khuddar Pakistan
all inclusive work environment
DUA Project
Donate Blood – Save A Life
Unprecedented Challenges since 2008...
Economic
• Exorbitant Inflation (30% in ‘08)• Rising Fuel Costs (80% since Jan 08) • shortages (Tariff Hike by 31%) • Devaluation 34% since ‘08• Increased Cost of borrowing
Political & Governmental• Deteriorating law and order• cumbersome / multiple approvals for cell sites required• Load shedding (12 Hours / day)• Luxury tax
Unprecedented Challenges since 2008...
Regulatory• Taxation
• discriminatory GST, dual taxation on SIM Activation Tax, Import duty on handsets
• 3G Auction/licensing process• Costs of compliance (NADRA)
Competitive• 5 competitors
• analyst are of the view that this market warrants 3- 4 cellular operators
• Tariff war• whilst there are no lowered QoS relaxation
• Increasing media spending / clutter
Going Beyond Consumer Expectations
Delighting the Consumer
Broadband & 3G
• PTA has set a throughput of 128kbps as the required speeds to qualify as being categorized as Broadband
• The United Kingdom has set this as 2Mbps• 3G offered by PTCL as Evo product, offering ~3Mbps
• based on CDMA IS-95 evolution
• The conventional evolution of GSM systems to broadband with mobility is via the UMTS standard
• Today, almost all operators with a 3G spectrum opt for HSPA as the preferred technology
• The GoP is due to give formal approval for PTA to formally auction the UMTS specturm
GoP’s R & D fundThe industry-academia link
• As per license conditions, cellular operators put aside 0.5% of revenue to the National ICT R&D fund
• …
Thank you