The mobile phone, an extension of the information
technology, has assumed the role of a magic wand in today's life
The fascinating options offered by this technology
at both ends of the users (dialing or receiving) while in movement
give a sense of freedom to the people. Unlike the landline phones
compelling the users to station at a certain place to talk, the cell
allows to have a chat while you are sitting on a hill top or traveling
in a car. This freedom of movement perhaps the major reason for
phenomenal spread of this little wonder around the globe. There was a
time when people use to carry, comparatively a much bigger handset,
with them as a status symbol. Initially, it was a costly affair and
only the privileged class of the society could afford the use of
mobile phone. Despite being heavy in weight and longer to over 6
inches in size, people use to display their mobile set obviously to
display their wealth, status and importance in the society. However,
the time has changed, the every day innovations in this field have
reduced the cell into a small object. Different mobile manufacturing
companies have given attractive shapes, designs and colors with latest
functions of information technology including photo-messaging, MSN,
e-mail and other Internet options.
In the early days when mobile phones were
introduced in Pakistan, people generally avoid to receive a call on
mobile phone as the receiver of the call had to bear the cost to a
certain level. However, the marketing experts realizing the cost as
the major hurdle in the growth of this technology done away with the
charges on receiving call and gave tremendous boost to the use of
mobile phones. Besides the call charges, the price of a handset has
also come down steeply from over Rs.80,000-100,000 to an average price
of merely Rs5000. Easy access to the connection, has also played a
vital role in the growth of mobile use in the society. Unlike the
landline connections, where one had to fulfill a number of conditions
to have a connection, the growth of mobile phones has smashed all
bureaucratic hurdles of the landline phone connections. Market experts
are of the opinion that call charges are still on higher side which
are hampering further growth of this sector. They hope that further
growth of this industry calls for reduction in call charges, as a
large market was still untapped in Pakistan due to cost factor.
However, the overwhelming growth of cellular phones
in a poor country like Pakistan is a win win situation for investors
in this sector.
While the growing demand for cellular phone has
created a number of openings on the economic front, it has made a
widespread impact on the social life in the country. On one hand, it
facilitates the young couples to maintain secrecy without fear of
social curbs, it also helping the underworld in the commission of the
crimes that is evident from the increasing number of holdups, car
snatching and the burglaries. However the merits of this technology
are so strong that it has to be opted with all social ills the mobile
phone technology carries. According to a survey, the abuse of cell has
helped formidable growth in crimes especially bank robberies and hold
ups. In order to check the crime at financial institutions and other
places of sensitive nature, the experts have developed a device which
freezes the incoming and outgoing signals of the mobile phones. This
device has become more popular for security reasons. Earlier, the
managements of different organizations had to display notices or
warning that to switch off mobile phones in this premises. However,
now the device has made their job easy as the cell phones
automatically become inoperative in the area wherever this security
device has been installed.
Law breakers on the other hand have evolved novel
ways in the commission of the crimes. A student was caught while using
hand free mobile set for cheating in the examination hall. He was
using the hand-free mobile on the pretext of hearing aid. Such crimes,
however, are the part of the game and such a useful facility cannot be
condemned on the basis of such happenings.
OVERVIEW OF THE TELECOM IN PAKISTAN
Pakistan has led its telecommunications industry
into 2003 under a policy to promote strong foreign investment. The
present government has implemented a policy of economic reforms,
deregulation, and privatization in the telecommunication besides other
Prior to 2003, the Pakistan Telecommunications
Company Limited (PTCL) controlled Pakistan's telecommunications market
with 98% dominance of the market.
This dominance ended on December 31, 2002, when the
government opened the vast Pakistani telecom market to competition.
New telecom companies, backed by foreign investors, can now compete in
local, national, and international telecommunications markets.
With the investment opportunities offered in the
telecom sector, Pakistan is striving for improvement of existing
infrastructure. Pakistan offers a large network and access to the
markets of the Middle East, Central Asia, India, and The Far East.
Currently, there are over 2.861 million telephone lines in use and
over 2,635,982 mobile cellular. Leading cellular companies providing
service in Pakistan are: Mobilink, Instaphone, U-Phone, and Paktel.
Despite improvements, the telephone lines are still
not accessible to the majority of the rural areas. Seventy percent of
Pakistanis live in rural areas. This may be disappointing news for
some, but if you're in the prepaid phone card business this
underdeveloped infrastructure can make you money. The lack of coverage
in the rural areas has created a need to set up Card Payphone
Facilities all over the country to ensure universal access to
services. In 1992, the first installations of card payphones occurred.
By 1998, card payphones were popping up all over Pakistan, indoors and
out. Today, with deregulation, PTA was able to reduce its royalty from
four percent to two percent and thus create a huge demand for pay
phone operators. In light of PTA's modern open policy, a large number
of licenses were issued to card payphone operators. The major card
payphone companies of Pakistan have displayed a significant increase
in booths and coverage of their Public Call Offices (PCO). The top
three payphone operators are World Call, with 21,929 payphones, Dancom
with 15,951 payphones, and Telecard with 10,385 payphones. In
summation, there are 98,759 payphones throughout Pakistan making
prepaid phone cards a demand especially in rural areas. The phones are
user-friendly to accommodate the 42.7% literacy rate.
The PTA, paying special attention to foreign
investors, has implemented new policies and tax regulations to promote
a friendly foreign business environment. Pakistan allows foreign
investment on a repatriable basis. Investors register their company
with the Securities and Exchange Commission of Pakistan, under the
Companies Ordinance 1984, and inform the State Bank of Pakistan of
The future in Pakistan telecommunications sector
looks effulgent. The government is acknowledging infrastructure and
private enterprise. This governmental reform has already experienced
rewards of a deregulated system. In 2001-02, the mobile industry grew
by 47%, payphones increased by over 17%, and listed phone service rose
7.8%. ISP service is available through direct subscription from over
100 operators and indirectly through Internet cafes. Overall, the
foreign investment opportunities are budding as more and more feel the
need to communicate, conduct local and international business, and
utilize technology, to increase efficiency and lower costs throughout
the developing country.
GROWTH PATTERN IN
TOTAL NUMBER OF
Pakistan Telecommunication Authority (PTA) has
announced that two new cellular mobile companies would be awarded
licenses through open bidding in a fair and transparent manner to cope
with the rising demand of mobile phone users.
According to the Chairman PTA, Maj. Gen Shahzada
Alam Malik, the process of granting licenses to the new entrants would
be initiated after floating Expression of Interest (EOI). The party
giving the highest bid would be granted license for operation in the
country. The new licenses valid for fifteen years would be technology
neutral and the whole process of issuing new licenses would be
completed within five to six months. The entry of new operators is
expected to bring huge investment in Pakistan.
Referring to the recent public forum held by PTA on
PTCL tariff proposal, the Chairman has said that PTA had accorded
approval to the tariff proposal submitted by PTCL stipulation the
relief on NWD and ISD customers from 15% to 23% respectively. He said
that earlier PTCL had excluded 12 countries from the list allowed
tariff reduction but according to PTA determination all the countries
would be enjoying reduction in tariff up to 23% for ISD calls.
During a recent presentation to the President and
the Prime Minister, PTA had proposed reduction in taxes on telecom
systems and services for the growth and development of the sector and
attracts investors. The proposals submitted by PTA for reduction in
taxes would receive encouraging response and after their approval
substantial relief would be available to the telecom service users, it
The existing operators whose licenses were going to
expire in the coming years would be given letter of comfort stating
that their licenses would be renewed provided they paid the fee
equivalent to the amount fixed for new operators through open bidding.
The telecom industry was growing at a much faster rate in Pakistan and
within three years the number of fixed and mobile phone users are
likely to touch the figure of 6 to 7 million.
The mobile phone industry experienced better than
expected sales, as worldwide mobile phone unit sales totaled 112.7
million units, an 18% increase from the first quarter of 2002.
"The mobile handset industry rode the crest of
a wave of robust replacement demand to realize record levels of sales
to end-users for the first quarter. Significant demand was recorded
across all geographical regions during the quarter, and annualized
sales trends based on these results suggests the market could be on
pace for a double-digit rate increase for the full calendar year.
TERMINAL SALES TO END-USERS ESTIMATES FOR 1Q03
(Thousands of Units)
1Q03 Market Share (%)
1Q02 Market Share (%)
Nokia, with a 35% market share in the first quarter
of 2003, continued to have more than double the market share of its
nearest competitor. Despite market share of more than 50% in almost
all GSM markets in Europe and Asia/Pacific, Nokia is still positioned
to grow market share in these core markets through the remainder of
According to a market analysis, the remainder of
2003 will see Motorola and Samsung battle for the No. 2 position,
while Sony Ericsson and LG will try to hold the No. 5 position. Both
South Korean vendors are solidly entrenched in leadership positions in
the CDMA segment, and both continue to make inroads into GSM markets
across the globe.
In 2003, an explosion in the availability of color
screen and camera phones is expected in mature markets, such as
Western Europe, and the market players predict that many customers
will be tempted to replace their existing mobile phones. Photo
messaging, or 'disposable photography,' is expected to be the
cornerstone service in mobile network operators' marketing campaigns
throughout the year.
The mobile terminals market in 2003 will be
characterized by 'device diversity' as mobile terminal manufacturers
launch a wide range of new handsets with features, such as gaming,
music and video. However, the majority of worldwide sales will remain
in the low-tier, low-function segment.
While the worldwide mobile phone industry has
reason to be excited by 1Q03 there are several risks unique to 2003
market supply and demand dynamics that could impact the industry
during rest of the year.
LG Electronics (LGE) while focusing LCD, mobile
terminals as growth engines for winning new business, has taken steps
towards the goal of becoming part of the global top three in the
electronics and information communications industries by 2010.
LGE Vice Chairman S.S. Kim aims to accomplish mid-
and long-term visions by pursuing three core objectives: putting LG
the top spot in winning core businesses, fostering promising business
for the long-term and reinforcing profit-oriented mindsets to secure
growth foundation. LG plans to move towards its goal with product
leadership and differentiated marketing by fostering LGE as a premium
ECONOMIC FALL OUT IN PAKISTAN SCENARIO
On the economic front, this sector has the strong
potentials to attract investment worth $6 billion over a period of
seven years after the deregulation of the telecom sector in Pakistan.
Awais Ahmad Khan Leghari, Pakistan's Minister for
Information Technology has recently said in his keynote address at
Telecom 2003 conference held at Geneva that the market is ripe for
getting more and more competitive nimble players. Since Pakistan is
stick to the economic reforms introduced three years back with a
strong commitment for maintaining consistency in the economic
policies, there would be no mid-stream changes in the policy. The
minister was heading the Pakistan delegation to the event organized by
International Telecommunication Union every four years.
Pakistan government with its Telecom policy had
come out with better terms and agreements than the World Trade
Organization (WTO). The policy assures up to 100 percent foreign
ownership, a committed policy on number and technology neutrality,
five-year policy review and 20 years license period, low upfront
license fee and performance bond, independence of regulatory bodies
and regulations, transparency and licensing process.
The initiatives were committed by Pakistan in the
interest of fast growth in an under-penetrated Pakistani market with a
telephone density of about three percent.
The local players in Pakistan were on strong
grounds both in the fixed and mobile phone sectors that helped to
attract some key regional and global players in Pakistan's market. The
much greater opportunities for multinational companies and operators
invite them to be proactive to venture and joint efforts with local
The telecom landscape around the world was also
changing fast with liberalization and deregulation bringing about
basic changes in the telecom sector paradigm. The crunch both in
telecom service and equipment supply market has influenced the way
operators, manufacturers and local entrepreneurs strategize business
approaches. The plummeting technology stocks and equipment prices were
now a reality facing the industry.
The centre of activities in the telecom landscape
for next seven to ten years is going to be more towards emerging
markets of Asia Pacific, Middle East, Latin America and African
continent. These regions would dominate as major telecom growth
The priority for high-profile new range of services
such as 3G mobile, broadband wireless and fiber-based services in the
developed world were sure to continue but the developing countries
would be the markets for core telecom equipment and services.
The local and regional entrepreneurs can make
significant difference in expansion of telecom activities compared to
few years ago when such opportunities were availed only by big
Keeping in view the regional context of South Asia,
Far East and Central Asia, the local entrepreneurs have started
contributing more significantly because of the awareness and demand
for variety of low cost services, availability of cost effective local
equipment, low cost human capital and skilled manpower as is the case
with China and Malaysia.
Currently, Pakistan has some 300 data network
operators, Internet service providers, pay phone and pre-paid card
operators, cellular mobile service providers and a host of value-added
entrepreneurs were successfully providing a broad range of services.
According to an estimate, even limited telecom
liberalization initiatives (4-5 years) have attracted investment of
about a billion dollars in Pakistan. The private sector entrepreneurs
had contributed more significantly in countries like Malaysia,
Thailand, Sri Lanka, Philippines and India.
Phenomenal growth of cellular industry in Pakistan
besides strategic location of the country has convinced the investors
to establish mobile phone industries within this country. So far the
cell phones being used in Pakistan are imported from different
countries. However, some mobile phone companies in collaboration with
some leading software houses in Pakistan are on their way to set up
mobile producing projects in Pakistan. Hopefully, this trend may open
new doors for investment, employment, exports and development in
Pakistan with its Telecom policy had come out with
better terms and agreements than the World Trade Organization (WTO).
The policy assures up to 100 percent foreign ownership, a committed
policy on number and technology neutrality, five-year policy review
and 20 years license period, low upfront license fee and performance
bond, independence of regulatory bodies and regulations, transparency
and licensing process. In the backdrop of these incentives, experts
are of the opinion that the tremendous investment is in the offing
during next three to four years in Pakistan.