Professional Documents
Culture Documents
Sir Nabeel-Ul-Haq
Submitted by group:
Shehmeen Ashraf
Class: BS (BA) 6th B
Date 13th July 2008
Report On
Telecommunication Industry,
Growth, Competition and its impact
on the economy of Pakistan
Topic
Executive Summary
What is Telecommunication?
Telecommunication industry in Pakistan
Pakistan Telecommunication Authority (PTA)
Sectors in telecommunication industry
1. Mobile Sector
I. Mobile Sector (Competitors)
II. Growth in March 08 Quarter
III. Cellular subscriber Growth
IV. Cities & Villages covered
V. Company-wise cell sites
VI. Cellular Penetration
2. Fixed Line Sector
I. Fixed Line subscribers (PTCL)
II. Comparison
3.
4. Payphone Services
I. PCO Mobile share
5.
Internet Services
I. Broadband Subscribers
6. Voice over IP
Impact on Economy
1. Impact of Deregulation on Economy
2. Foreign Direct Investment (FDI)
3. Impact of Deregulation on Economy
Executive summary
Pakistan telecom industry consist 6 sectors, Mobile Sector, Fixed Line Sector,
Wireless Local Loop Sector, Payphone Services, Internet Services, Voice over IP.
Telecom industry is booming throughout the country as two million mobile
subscribers were added every month throughout the last year.
Previous year the sector grew by 80 percent while average growth rate in last four
years has been more than 100 percent. As per March 2008 quarter report all
companies in total added about 5.7 million subscribers to mobile networks but PTCL
dropped in Dec 2007 bringing to a mere 4.8 million by 5.24 million across Pakistan,
2.1 million subscribers of WLL services. Payphone services had 471,410 subscribers
in Dec 2007; currently there are about 3.5 million internet subscribers all across in
Pakistan.
Network coverage of almost 90 percent of the total population of Pakistan has made
the industry even more attractive for foreign investment. Industry analysts said that
there is still a great margin of growth in this industry, in 2003-04 the sector was
offering 466,068 direct and indirect employments and now in 2006-07 it is more than
double at 1,366,698 employment opportunities. An intense competition is seen in the
telecom sector and all the companies are trying to take edge on each other, which is
helping the subscribers as they are getting advanced and new packages at low prices.
According to the Pakistan Telecommunication Authority (PTA) Industry Analysis
Report 2007, out of 376 tehsils across Pakistan, almost 77 percent are covered with
mobile networks, bringing the figure to 290.
In 2004 there were less than 2000 cell sites installed by all mobile operators for
provision of mobile services. Today total cell sites of all mobile operators are more
than 17,500. romail Kenneth.
During 2006-07, telecom sector has received above US$ 1,824 million FDI, which
was about 35% of total FDI in the country. A total of Rs.235, 613 million revenue was
generated by telecom industry in 2007.The sector is currently contributing 2% GDP
out of 7% to the Government of Pakistan
1.
Telenor Pakistan
PTML (Ufone)
Warid Telecom
Are providing services using GSM technology whereas the sixth operator i.e.
Instaphone is providing services using AMPS (Advanced Mobile phone
system) technology
Heres a brief description of the top mobile companies in Pakistan.
At the top is Mobilink, the Pakistani unit of Egypt-based telecom
company Orascom. It has been operating in Pakistan since 1994.
Ufone, a wholly owned subsidiary of Pakistan Telecommunication Co. Ltd
(PTCL), is now under the control of Etisalat group of UAE. For
those in Pakistan it is the one company where they can easily invest
locally. It has been operating in Pakistan since 2001.
Warid, owned by the Abu Dhabi group of the United Arab mirates
and sister of Wateen group is number 3. It has been operating in
Pakistan since 2006.
Norways Telenor, a recent entrant with about a billion US dollar
investment in Pakistan has been doing well, based on its recent
earning report. Telenor stock is listed in the Oslo stock market (TEL) and in
US(TELNY.PK). It has been operating in Pakistan since 2005.
CMPak, formerly Paktel, is the latest target of foreign
acquisition. After it got acquired by China Mobile it is in the process
of rebranding. It has been operating in Pakistan since 1991.
Instaphone, a cellular business of Luxembourgs Millicom, in the first ever sale
of a mobile business in Pakistan by a foreign
company. It has 0.3 million subscribers.It has been operating in Pakistan since
1991.
Growth in March 08 Quarter:
As per March 2008 quarter report all companies in total added about 5.7
million subscribers to their networks
During the month of April it has reported one million additions in Zong's numbers
which is quiet impressive.
Cellular subscriber
Growth
Pakistan is on 4th number in
cellular subscriber growth
in industry, number 1 is
china, which is due to its
large population. The rate
of growth of Telenor
subscribers (or SIMs) has
been faster than Ufone.
covered by mobile services providers, where either they have their infrastructure or
providing services. In 2008 Instaphone has covered 95 locations, Warid has 183,
Paktel has 362, Telenor has 1,252, Ufone has 2,986, and market leader Mobilink has
covered 7,011 location all over the Pakistan.
Company-wise cell sites
Cell sites are towers which transfers signals. This graph is comparing data of March
2007 with March 2008.
Cellular Penetration
Cellular penetration is areas covered by mobile services providers Industry wise in
Pakistan. This graph is
comparing cellular penetration
of 2007 with 2008 provincial
wise by the whole mobile
sector. Last year ufone was
operating just 7 cities as
compare to now they are
operating in 41 cities which is
highest among competition in
Balochistan, that means ufone
is market leader in Balochistan.
Many big change events are happening in PTCL at the moment after its privatization.
these include the VSS (Voluntary Separation Scheme for its employees), ERP (SAP
based), restructuring, B& CC (Billing and Customer Care Software) etc. Another
seemingly minor change was change of brand identity (logo) that will present PTCL's
new face after privatization, with greater focus on customer satisfaction and bringing
about of new advancements in telecom for Pakistani consumers.
Historical Background
2007 it remain same, but dropped in Dec 2007 bringing to a mere 4.8 million across
Pakistan.
Comparison
Mobile sector continues to be major share holder in terms of Teledensity, which is
adding more than 2.3 million subscribers per month However, fixed Teledensity
dropped from 3.04% to 2.99%, but it is expected to rise in light of the newly launched
WLL services. PTCL has 48 lacks subscriber nation wide and sharing number of
employees with ufone 40 thousand. Where as ufone has 16million 1 Koror 60 lacks
subscriber and have 1500 employees. PTCL staff reduced because of offering Golden
hand shakes.
3.
Wireless Local Loop services were introduced in Pakistan after deregulation of local
loop sector in 2004. Wireless local loop services are based on CDMA and are
considered an alternative to copper lines. Recently re-branded Vfone service by PTCL
is the market leader and
recently there have been
many interesting
marketing and pricing
moves. Now 17 WLL
licenses were issued out of
which PTCL, World call,
Telecard, Great Bear,
Burraq, Mytel and Wateen
are operational. WLL customer base has shown rapid growth since 2003. As of the
writing there are 2.1 million subscribers of WLL services. The entire industry in
growing that can be judge from increasing number of subscribers.
WLL Market Share
Maximum market share is
covered by PTCL with
58.7% share of the whole
WLL market and having
1,384,009 subscribers, than
come worldcarll with 18%
market share and having
423,738 subscribers all
over the Pakistan.
Total Teledensity:
Teledensity: when we
compare the number of subscribers, so out of the sample of 100 people, the number of
subscriber of any operator is called Teledensity of that operator.
Tele density under PTCL monopoly is quite low - only three percent compared to
seven per cent in India. Another more efficient operator in the private sector would
have generated twice the current level of PTCL profits through better cost controls
and higher penetration rates.
The corporate income tax, sales tax and other taxes collected from the new licensees
would exceed the total taxes paid by the PTCL at present as the aggregate profits of
the industry would rise due to higher teledensity and higher penetration rates.
With the induction of new licencees, the teledensity of Pakistan is estimated to double
in the next two years to eight million subscribers. Public Sector monopoly could reach
only four million in 57 years.
Teledensity (Fixed + WLL + Mobile)
4.
Years
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
July-07
Aug-07
Sep-07
Oct-07
Nov-07
Dec-07*
Jan-08
Feb-08
Mar-08
Apr-08
May-08
2.80
3.66
4.31
6.25
11.89
26.26
44.06
45.91
46.91
47.84
48.75
50.88
52.94
53.41
55.26
56.70
57.43
58.2
Payphone Services
Payphone services are companies provided license by PTA, to provide PCO sets
to the retailers.
Growth of fixed line PCOs remained impressive till 2004-05 where it was going at an
outstanding pace. PTA allowed mobile companies to establish their PCOs. After
2004-05 growth trend of fixed line PCO declined but wireless PCO services
flourished in Pakistan. In 2003 there were 127,910 subscribers but it grows and
reaches at 471,410 subscribers in Dec 2007.
5.
Internet Subscribers
According to
estimates of ISPAK
(Association of
Pakistani ISPs),
currently there are
about 3.5 million
internet subscribers
all across in Pakistan
whereas total users crossed 17 million marks. Currently around 3,002 cities are
connected to internet.
Broadband Subscribers
It is very costly service thats why having fewer subscribers than any other services.
Pakistans Broadband market has been slow despite the fact that services have been
available since almost five years. Broadband services can be offered with the help of
various technologies such as DSL, Cable Modem, Fiber to the Home (FTTH), Wimax
(worldwide interoperability for microwave access). Cost of service is the major reason
behind this slow growth.
6.
CallPakistanDirect
Impact on Economy
5. Impact of Deregulation on Economy
The impact of telecom deregulation on overall economy is quite obvious. A total of
Rs. 235,613 million revenue was generated by telecom industry in 2007. This
contribution has major impact on economy of Pakistan. The sector is currently
contributing 2% GDP out of 7% to the Government of Pakistan.
Since the market structure has been deregulated, the PTCL monopoly broken and new
private sector operators given licenses to compete, it would be extremely difficult for
PTCL to show such performance in the future despite its dominant market power.
6. Foreign Direct Investment (FDI)
In the last 2-3 years the telecom sector has attracted record inflows of FDI.
During 2005-06, telecom sector received over US$ 1.8 billion FDI out of
US$3 billion FDI and emerged as the only sector of the economy to attract
such huge investment where its share in total FDI crossed 54%.
During 2006-07, telecom sector has received above US$ 1,824 million FDI,
which was about 35% of total FDI in the country.
Years
Total FDI
FDI in Telecom
Sector
Contribution in
Total FDI (%)
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
July-Sep 07
Oct-Dec 07
484.7
798
979.9
1524
3521.0
5124.9
962.5
1052.1
6.1
13.5
207.1
494.4
1905.1
1824.3
363.9
290.4
1.26
1.69
21.13
32.44
54.11
35.60
37.71
27.6
Jan-Mar 08
982.5
156.6
15.9
It is expected that the trend of investment may continue in the next 5 years because
large potential market still exists in Pakistan and all operators intend to grab their
share. China Mobile acquired Paktel which has contracted out US$ 500 million worth
of project to renowned companies like Ericsson, ZTE and Alcatel to roll out their
networks. Similarly Mobilink also plan to invest US$ 500 million in 2007-08 for
improving and expanding its quality of service.
Investment by Operators
7. Financial
$2 Billion revenue generated during the first 9 months of the fiscal year 2007-08 (i.e.
from July 07 to March 08).
2.0
3.3
5.2
9.9
18.8
28.2
8.64
8.89
8.89
6.9
8.2
6.9
9.7
7.7
7.9
1.82
1.59
1.7
0.9
0.3
0.2
0.14
0.21
0.25
8.9
11.5
12.1
20.5
26.8
36.3
10.6
10.69
10.85
Sri Lanka
%age
Regulatory
charges
Service tax, GST
GST
VAT
License Fee
0.5% + 0.5% R & 0.3% turnover (t.o.) + 1%
D
of capital invested (inv)
Spectrum Charge
Cost recovery
~1.1% to t..o
USO
1.5%
China
% age of
revenue
3%
Nil
India
% age of
revenue
10% + GST
5 10%
~0.5%*
(China
Mobile)
Nil
2 ~ 6%**
0.5%+3%
(Tax)
Incl in
license fees
17%~26%
+ GST
5. Telecom Imports
The exponential growth in the telecom sector is burdening the overall imports of
Pakistan where sector requires spending of about US$ 1 billion just on the import of
Cellular mobile handsets annually, which puts burden on our foreign reserves and
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
1.6
1.6
1.7
1.7
1.9
2.0
Conclusion
Bibliography
All the facts and figures quoted in this presentation have been taken from
1. Information of providers from PTA site www.pta.gov.pk
2. Mobile phone tariffs available at this PTA page.
http://www.pta.gov.pk/index.php?
option=com_content&task=view&id=542&Itemd=566
3. Wikipedia http://en.wikipedia.org/wiki/communication_in_pakistan