SPECTACULAR GROWTH WITNESSED IN TELECOM SECTOR
SHAMIM AHMED RIZVI,
Bureau Chief, Islamabad
June 19 - 25, 2006
The telecom sector in Pakistan is growing at a spectacular pace with a promising future forecast indicating rapid growth in the use of mobile phones, rapid expansion in wireless sets and more competition in the fixed line telephony after the Privatisation of State owned giant Pakistan Telecommunication Company (PTCL).
According to Syed Vaqar ul Islam, formerly of NCR now Chief of Nokia in Pakistan and a pioneer and expert of Pakistan's telecom Industry "today our telecom market is viewed as one of the fastest growing markets of the region".
Despite being a young but emerging in the sphere of economic development, the information Technology (IT) industry has revolutionized numerous developing economies across the globe; having gained the status of a flagship industry in most cases. Gone are the days when it was considered as the future's industry; today, it has emerged as one of the most potent forces in economic development along with the portfolios of Energy, Telecommunications and Communication thereby encapsulation the entire realm of economic growth, from internal as well as external perspectives (s).
Although it took a late start in Pakistan, the local IT industry today has matured enough to play a vital role in economy. Like other industrial sectors, it has undergone an initial phase of learning, experimenting, failing and in most cases successfully delivering on its promise (s). A strong commitment on the part of the government in developing this industry has witnessed a phenomenal growth in the recent past. The industry is now ready to lead from the front. It is recognized worldwide in terms of quality standards and a sufficiently developed resource pool. Some globally known blue chips like Diamler Chrysler, Toyota, GE, Citibank etc. are added up to the long list of international customers.
The industry is now preparing itself to play a major role in revenue and employment generation in the country. It is believed that it would be progressing rapidly soon it touches a billion dollar mark. Presently, the IT spending in Pakistan is around $ 700 million besides $ 100 million exports of Software and Services. The Indian IT industry, on the other hand, is generating some $ 20 billion revenue with a future planning of expanding it to $ 60-80 billion. In last five years, the government has taken very commendable steps to give impetus the IT industry. Availability of infrastructure, bandwidth connectivity, telecommunications besides setting up the IT ministry, federal IT secretariat and Pakistan Software exports have started yielding results.
The growth of IT Industry in Pakistan has seen tremendous during the last two years. According to Dr. Mateen IT Advisor to the Minister for Science and Information Technology, IT industry in Pakistan today is probably the most exciting and dynamic sector of the National Economy, which is supporting revenue growth by 30 to 40 percent annually. He claimed that almost all the leading IT player in the world have ensured their presence in Pakistan. The growth in cell phones has been tremendous. It has already crossed the figure of 25 million and is increasing by about almost 1 million every month.
The GSM Association, the global trade association for GSM mobile operators, has projected a market size of 50 million mobile phone users in Pakistan within next 3-5 years, from the current base of about 25 million. The launching of Telenor and Al-Warid has accelerate the expansion and competition for the benefit of the consumers, with world renowned companies, like Nokia and Ericson providing network support. The mobile operators are also expected to invest one billion dollar a year over the next five years to upgrade and roll out networks. This $ 5 billion investment in capital expenditure would be in addition to the US $ 291 million investment per operator for network licenses. The total teledensity, as a result, has jumped from 2.14 percent in 1996-97 to 11 percent by December 2005, including 3.33 percent in fixed, 6.91 percent in cellular and 0.13 percent in wireless.
Speaking at a World Telecom Day function in Islamabad last month Minister for Information Technology, Mr. Awais Leghari told the participants that the Ministry of IT and Telecom has taken up three projects worth over Rs. 1 billion and recommended them for a peer review for the purpose of final approval. The projects aimed at enhancing the quality of human resource in the IT industry and bridging the gap between the industry and academia, are likely to be launched within the next few months. He said the three projects were aimed at establishing career placement centers in 25 universities of the country besides launching internship as well as apprenticeship programmes to add value to the human resource needed in the IT industry. "These are very important projects and the purpose behind them is to attract and develop capacity of talented IT graduates and enhance career opportunities in the IT and telecom disciplines", he said.
Giving details of the projects, Leghari said the ministry had planned to launch an outreach scholarship programme worth over Rs. 250 million to pick up talented college students from remote and backward areas and then train them in the boot camps before their admission to four tier-one universities of the country. "Up to 200 students who are admitted to IT and telecom disciplines by these universities, would be offered fully funded scholarships to complete their degrees in a congenial and competitive academic atmosphere". He said.
The ministry had also developed an internship programme for the country's IT industry at an estimated cost of over Rs. 450 million to offer internship to 10,000 IT graduates who would be offered 6 month long internship each at a leading IT company for which they would be paid Rs. 6,000 monthly stipend, Leghari said adding that the internship project was being launched in the backdrop of an acute shortage of high-end IT professionals within the IT industry, which needed 8000 such professionals for the next year alone. "We hope the internship programme would generate jobs, help companies get required trained human resource besides leading to an overall up gradation of the IT and telecom disciplines in the higher education institutions", he said.
The minister said the third major project which had been taken up by the research and development fund was the IT industry apprenticeship programme which would be launched at an estimated cost of over Rs. 220 million to subsidize IT companies to recruit graduates possessing the basic skills and knowledge to provide IT enabled services. The IT companies roped in through this project would be offered Rs. 15,000 a month subsidy per person for a period of one year and in all about 1,000 jobs would be generated through this programme. "The companies would have the complete freedom and discretion to hire any person through this programme, but they will have to provide a training programme with course details and content, including minimum training for 400 content hours", he said.
Meanwhile, addressing the launching ceremony of the first Regional Cisco Networking Academy Programme for Women in Pakistan, Leghari called for companies to act as socially responsible corporate players to create a knowledge based economy and society. He said Pakistan being a 150 million country had the potential to emerge as an interesting place for international companies looking for businesses. He said the policies of the government shaped by the vision of the president had already brought about a turnaround in various sectors with telecommunication being a prime example.
FIXED LINE DENSITY
TOTAL FIXED TELE DENSITY
Nov - 05
Dec - 05
* Total Fixed Line Tele density does not include Tele density of AJ&K * Fixed line density is of Dec-05
"The growth in the telecom sector has been phenomenal which is corroborated by the fact that two years ago we had merely 2.8 million mobile phone subscribers who have gone beyond 30 million now which reflects on the strength of the policies introduced in the sector", he said adding that the amount of job creation in the telecom sector had also been between 100,000-150,000 and this had been possible despite the fact that the industry was not being able to find enough human resource available in the country.
He said the government was spending heavily on areas such as e-government and broadband Internet. The ministry had planned to use the Universal Service Fund (USF) to provide 1.5 million broadband connections within the next two years, he said adding that e-government was yet another area in which the government had invested heavily in an attempt to introduce a paper less economy.
According to Syed Veqar ul Islam Nokia's country, "Director today our telecom market is viewed as one of the fastest growing market of the region" in terms of opportunities as well as the number of mobile phone customers. This is all because of the overwhelming response that Pakistan's telecom sector has received especially during the last three years.
Not only various cellular service operators, both local and foreign, have made huge investments and installed their equipment all across the country, a number of handset manufacturing companies have also entered the market with high spirits. Nokia world's leading mobile handset manufacturer is also keen to share the fruits of this growing market. A world leader in mobile communications, Nokai is dedicated to enhancing people's lives and productivity by providing easy to use and innovative products like mobile phones, and solutions for imagine, games, media, mobile network operators and businesses.
A top official in the Pakistan Telecommunication Authority (PTA) said the sector, which contributed up to three percent of GDP growth during 2004-05, registered some decline this financial year but it was still at a higher side compared to other countries of the region. "This year, we also witnessed higher growth in both cellular and fixed line telephony subscriber base, coupled with continued investment in infrastructure development by the operators. He said around $ 2 billion investment was expected over the next two years by major telecom operators, mainly in infrastructure development.
Analysts however, say though 2005-06 witnessed a decline in telecom share in GDP, it still offers better return to the operators mainly in rural areas. The main reason of the decline was the phase of PTCL privatisation, which first witnessed delay in entity's sell off and then payment issues raised by the UAE's Etisalat". But, he said, 2006-07 could prove different in terms of telecom development and its share in GDP growth, as the companies in the deregulated environment would focus more on better infrastructure to improve service quality. Telecom topped with the energy sector in attracting foreign and local investment during the first nine months of current fiscal year, which led to a rise by over 100 percent in foreign direct investment.
Managing Director of Pakistan Software Export Board told Page that Pakistan's Software exports have for the first time crossed $ 72 million (as recorded by the state bank of Pakistan during July 2005 to May 2006) registering a growth of 50 percent as more and more western firms are turning towards Pakistan for IT enabled services to cut costs and raise profits. Officials and industry players believe the rising export of figures indicate Pakistan is fact catching u with rapidly developing software industry and at such rate, he country's global IT revenue may touch $ 9/10 billion by the end of 2009-10.
He said the latest data compiled by the State Bank of Pakistan suggested software exports and service outsourcing reached $ 72 million during 2005-06 and could hit $ 80 million or above by the close of fiscal year on June 30, "It shows software export growth at 50 percent", said Hasan. "We managed to surpass growth rate of 2004-05 as in that year exports of software and It enabled services reached $ 48.5 million against $ 32.88 million during 2003-04".
The IT industry has emerged as the fastest growing sector this fiscal, mainly supported by phenomenal rise in call centers operation during the last two years. More than 140 centers are currently operating mainly in Lahore, Karachi and Islamabad offering employment to around 5,000 people. Defined as a unit, the call centers have adequate telecom facilities, trained manpower and access to database providing information to customers. The advancement in telecom technology has made it possible that the person handling a call could be anywhere provided that communication and interaction is properly handled. Growth in business from western companies has inspired local investors to explore new opportunities. Though Pakistan remains far behind India, operators believe they are on the right path now, he added.