Vibrant telecom sector would attract 4 to 5 billion dollars fresh investment during the next 4/5 years

From: Shamim Ahmad Rizvi,
Aug 29 - Sep 04, 2005

A real revolution, has taken place in the telecom sector in Pakistan during the last 5 years specially after January 2004 when the first ever mobile phone policy was announced to lay grounds for granting additional licensing and enhancing competition in the mobile phone industry in Pakistan.

According to sources in Pakistan Telecommunication Authority (PTA) there were about 2,50,000 cellular subscribers in the country when the first cellular service started functioning in Pakistan which now stood at about 14 million raising the teledensity to about 9 percent by July 2005 from 2.3 percent in 1999. The revolution has taken place during the last 15 months, which showed an increase of over 150 percent in the number of cell users. The cell phone population was multiplying by five hundred thousand every month and it is estimated to press over 40 million mark during the next 5 years.

The PTA Chief told newsmen at Quetta last week that telecom revenue has reached Rs. 171 billion and direct foreign investment in telecom sector touched the figure of $ 495 million during the current year.

The Minister for Information Technology, Awais Ahmad Khan Leghari while speaking over phenomenal growth of telecom sector at a seminar last week expressed his confidence that the vibrant telecom sector would attract 4 to 5 billion dollars fresh investment during the next 4/5 years besides creating additional 15,000-20,000 jobs during next years.

The cellular market till last year was dominated by four companies which included Egypt-based Orascoms Mobilink, Instaphone and Paktel that have partnership between a Pakistani group and Millicom International Cellular of Sweden, and state-owned U-fone is already operating here. The Mobilink, owing to its attractive customer packages has succeeded to grab a major share of the market with more than 3 million subscribers to its credit.

It may be recalled that PTA had issued two licenses for launching cellular services to UAE's Al-Warid of Chairman Shaikh Nahyan bin mubarak Al- Nahyan and Norway's Telenor of Chief Executive Officer Fredbrik Baksaas last year. These two new companies have led to a real break through in the telecom sector in the country.

The idea of award of two more licenses to (Al-Warid & Telenor) was a personal initiative of Chairman PTA, Maj. General (Retd) Shahzada Alam Malik. The idea of additional licensing was not appreciated on the pretext of commercial viability of granting new licenses. It was generally believed that mobile phone subscribers' level had reached stagnancy and there is no further growth expected in this sector. It was projected that the companies already operating (Mobilink, Ufone, Instafone & Paktel) in mobile sector were sufficient to cater the requirement of the country. The Chairman PTA was opposed to that argument and pleaded that mobile subscribers, which stood at 2.3 m in 1999 can conveniently be increased to three to four times if the tariff structure of the companies was put to acid test of perfect competition. The experts at all decision-making levels thought that Chairman PTA assessment was over optimistic. It took considerable time for Chairman PTA to convince the decision makers, and let his idea be a reality. His idea has become a reality with a subscriber base of about 14 million.

Replying to a question at a seminar held recently as to what could be the scenario after the Privatisation of PTCL, PTA Chief known as a strong advocate of deregulation said that a tough competition is expected to emerge between the telecom operations in the country. Upcoming competition among the telecom players would ensure the survival of the fittest; encourage quality in service, expansion in the network, and facilitation of the subscribers. Regarding increasing regulatory responsibility of the authority aimed fast growing telecom sector, the PTA Chairman said: "We are increasing our capacity by hiring professionals to meet the challenge of regulating the fast growing overall telecom sector. He said that the PTA will not tolerate any inconvenience to the telecom customers and come hard on the companies, giving poor service and below the prescribed standards."

There is no doubt that as a result of the aggressive strategy of the government, the IT and telecom sector has made rapid progress during the last few years. Use of computer/Internet has grown with phenomenal speed due to reduction in bandwidth rates and spread of the facility in different regions of the country. Similarly, the demand for both fixed and mobile phones has grown rapidly. However, it is fact that we had almost become users of consumers of modern technologies because of lack of necessary research and development activities. Despite repeated claims of the government, Pakistan could not achieve any significant progress in software development whereas there are no plans in sight for local manufacturing or development of computers and their accessories. Same is the case with the communication technology as we import all sorts of phones and accessories. Thanks to the increased budgetary allocations for the sector, the country today has a few quality institutions producing IT and telecom graduates but we are unable to absorb them. It shows that there is something seriously wrong with the approach and it needs to be rectified at the soonest to reap the benefits of modern technologies.

Currently, the issue of intellectual property right is a major hurdle in the way of software business in the country. It should, therefore, be resolved soon to encourage software developers. Concrete steps are needed to give a practical shape to the concept of E-government, which has the potential to give a kick-start to IT business to the grass root level. The implementation, however, calls for transparency in government policies and actions.