Pakistan: Mobile players in transition

Ajay Sunder/Frost & Sullivan
Pakistan’s mobile market has shown healthy growth with the number of mobile subscribers expected to hit 130 million this year. The market is in transition from being a state-owned monopoly to a competitive market backed by international players and has undergone a lot of systematic changes over the past few years.
 
Regulatory uncertainties have had a detrimental effect on the overall market. The biggest obstacle this year was the inability to finalize the terms for the auction of 3G mobile licenses. Although efforts have been on since 2007, there have been significant delays in the process. In May it was reported that 3G licenses would only be awarded in 2013.
 
Early this year, in a major crackdown on multi-SIMs, the Pakistan Telecom Authority (PTA) revised the limit on the number of SIMs per person to five. There was initially some confusion around this as operators were still working with the earlier number of 10.
 
Also, there is no clarity yet on the status of MNP (mobile number portability). Last year the government decided to ban MNP, but subsequently no action has been taken. All the leading operators still report MNP statistics on a monthly and quarterly basis.
 
Foreign investment has been a significant trend in encouraging growth in Pakistan’s telecom sector. Despite the political and regulatory uncertainty, the telecom market is perceived as attractive by international players, with the likes of SingTel and Telenor entering in the last few years.
 
The telecom sector received close to $2 billion in foreign direct investment (FDI) in fiscal 2005-06. Another $5 billion of FDI has been pumped into the telecom sector since then, but the global financial crisis, regulatory uncertainty over 3G and the lack of a future roadmap has led to a decline. Despite this, the overall telecom sector is still seen largely as investment-friendly.
 
The country’s fixed-line market is still plagued by slow growth, but in the last decade has increased its fixed subscriber base by fourfold. But in the last few years, fixed teledensity has remained stagnant at 4%. The majority of working lines are in urban areas, and penetration in rural areas, where more than 75% of the population lives, is dismally low.
 

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