Dec 29 - Jan 04, 2003

Paktel, one of the four mobile phone companies operating in Pakistan, expects the cellular market to post a phenomenal growth next year pushing the number of subscribers to 7 million compared to 3 million end this year. Paktel also expects to enhance its susbcribers' base from 300,000 presently to 2 million end next year being optimistic that the launching of GSM network in March next year would give it the needed push in a market where the growth would be lead by GSM.

The above comments were made by the Chief Executive Officer of Paktel, Jerry Mobbs, who was in Karachi to sign a loan agreement with a consortium of three banks; United Bank Limited, Standard Chartered Bank Limited and Askari Commercial Bank, to provide Rs 20 million credit facility. The agreement signed in Karachi on the 16th of this month would help Paktel buy equipment, machinery and software to set up its GSM network in the country. The company would be making a cumulative investment of $150 million of which the Rs 20 million loan is the first phase.

Mr. Mobbs also said the trends indicate that the number of mobile phone users in the country is growing at a phenomenal rate and would be further gaining momemtum in the years to come. "Last year it stood at 1 million and is expected to cross the 3 million mark end this month depicting a three-fold increase. It is expected to touch the 7 million mark by December next year and we are hopeful that the launching of the GSM network in March next year would help us expand our customer base by almost seven-fold to 2 million by end 2004."

Paktel's GSM network would be available in at least 156 cities and towns across the country offering the second largest coverage in the country thereby helping the company to fix a target of 2 million customers by end next year. "We have already added 35 new cities on our existing network since January this year and would add another 10 cities on it by first quarter next year. We never oversold lines beyond our capacity and we intend to do that with our GSM network so as to provide our subscribers the best service, which has been out trademark all along since we bought the company from the original owner about three years ago. The mobile phone market in Pakistan is now in a take-off position crossing the 3 million mark this year and growing more rapidly next year touching the 7 million mark by December next. It has the potential to absorb 10-12 million lines and would post strong growth because of favourable microeconomic indicators all around."

Mr. Mobbs defended that mobile phone tariffs in the country saying that they are very compatible to other countries. "Mobile phone call here costs much less than that in many other countries. For instance, a one minute mobile call here costs just about 5 cents on an average whereas it costs about three to four times that much in the UK at around 15-20 cents per minute. In fact, mobile tariffs here have been reduced substantially compared to other utilities the costs of which have been on continuous increase over the years. The low tariffs had discouraged the investment in the mobile sector but that's been the part and parcel of the local market. However, an explosion is about to hit the market in the next two years and our objective next year to launch the GSM network is timely indeed because the growth will be lead by GSM."

"Paktel is operating in 20 countries across the world including Pakistan. Some of the markets Paktel is operating in are accelerating faster than the others and we expect Pakistan to be one of the top growing market for us next year."

With the "extremely fast rollout" of the GSM network in the first quarter next year, Paktel expects to be the top operator both in term of coverage (at least in 156 cities and towns nationwide) as well as in customer base (2 million by end next year compared to 300,000 at present). It expects the launching of the GSM network would help it to be significantly more efficient, and even the best, over the next few years. Mr. Mobbs feel that the GSM would give Paktel the edge over the other operators as the growth in the mobile phone would be lead by GSM in the years to come 6.8 million of the total 7 million mobile phones expected to be in use in the country by end next year would be GSM.

So what are the benefits that the GSM network to an ordinary subscriber? Mr. Mobbs said that the GSM service would offer Pakistani cell phone users to have access to over 100 countries across the world. In addition, the network would offer first ever prepaid roaming facility in the country where 80-90 per cent of the total revenue comes from prepaid cards.

The launching of the GSM network by Paktel in March next year and the expansion of base of mobile phone users to 7 million next year are some of the indications of the take-off of the mobile market in Pakistan. The Paktel expects to expand its customer base almost seven-fold by next year which would also witness the addition of two more mobile operators to heat up the competition for the benefit of users both in terms of service and value. The Pakistani mobile market has certainly reached the take off point where it is expecting an explosion. Reducing the activation fee would definitely encourage the phenomenal growth, particularly in a market where the mobile sets are available at extremely low prices.

Mr. Mobbs felt that high activation charges is the single biggest detriment to the growth of mobile phone in the country. "Mobile sets are cheap in Pakistan but high activation charges are discouraging the use of mobile phone in the country. At present activation fee stands at Rs 2,000 compared to Rs 1,250 about year and a half ago."