BALOCHISTAN: A HIGHLY POTENTIAL TELECOM MARKET

SYED FAZL-E-HAIDER, QUETTA
July 16 - 22, 2007

The level of development in telecommunication is generally measured through tele-density. In terms of telecommunication penetration, Pakistan is taking lead in Asian economies. Pakistan opened its basic telephony market for private investors in 2003 and since then the country witnessed a rapid growth in penetration in terms of teledensity.

By virtue of its geography, demography and geology, the provision of telecom access has become a challenge in Balochistan. Its difficult terrain, scattered population, less affordability and non-availability of electricity and lack of infrastructure have been the main hurdles impeding the development of telecom in the province. Though Pakistan has observed a fast growth in teledensity, yet there exists a digital divide among four provinces. The country's largest province, Balochistan still lags behind other provinces in cellular or fixed line teledensity. A few years back, the cellular teledensity was just 3.4 per cent in Balochistan while in Sindh it was 11 per cent. Cellular teledensity in Punjab and NWFP was 8.3 and 5.4 per cent respectively. Balochistan was at the lowest ebb where total fixed line teledensity was just 1.9 per cent while it was 2.7 per cent in NWFP and 4.1 per cent in Sindh province.

According to the official sources, the teledensity has significantly grown during 2006 in Balochistan where it increased from 5.6 per cent to 10.47 per cent, showing a growth of almost 87 per cent. Mobile sector is the main contributor to the teledensity in the province with a share of more than 8.05 per cent. The number of mobile subscribers has increased many times compared to 112,290 in 2004.

Since 2003, the payphones have been increasing in the province. According to the latest estimate, Balochistan has a total of 11,367 payphones which include both fixed and wireless payphones. More than 150 locations are having Internet access across Balochistan. At least seven Internet Service Providers (ISPs) are providing Internet/Broadband services in the province. WLL licensees are operating in the province from 0.5 per cent to 0.1 per cent for three years initially and 0.5 per cent to 0.25 per cent in subsequent two years.

Last year, the fixed line subscribers in the province have dropped by 5 per cent, as the people are substituting fixed line with Wireless Local Loop (WLL) and mobile services in Balochistan. In April 2005, the Telecard Limited launched its Go CDMA WLL telephone service in Balochistan. In the first phase GO CDMA telephone service was provided in Quetta, Hub, Sibbi, Usta Mohammad, Dera Jamali and many other small towns. However, in the second phase, it has been planned that the WLL network would be extended to Chaman, Zhob, Turbat and Gwadar.

Balochistan is still a highly potential telecom market. For geographical, social and demographic constraints, the private mobile companies hesitate to invest particularly in remote areas of the province. These constraints have increased the cost of doing business in the province. In other words, the private firms do not consider the far flung areas of the province as commercially viable for launching their services. Some mobile operators like Mobilink and Ufone, for being national organizations, are however expanding their services across the province.

The mobile network covers a population of 2.7 million in the province. Mobilink and Ufone have extensive plans of increasing coverage across Baloch and Pashtoon belts in the province. All mobile operators are working in the province with Mobilink having maximum coverage in nearly two dozen cities of Balochistan. It has 1.3 million subscribers in the province. It has plan to extend its services to around 28 cities and towns of the province.

Mobilink started its operations in 2001 in Balochistan. Since then, it has been increasing its investment in the expansion of its network and capacity in order to meet the rapidly growing demand for its services in the province. "There is immense potential in the province", said Zia Khatak, the regional manager operations of Mobilink in Quetta. He said, "Mobilink is expanding its services across the province. We have presence in remote areas of the province including Sibi, Dhadar, Gwadar and Zhob". "Scattered population, difficult terrain and security environment in Baloch tribal belt have been the main obstacles to penetrate the potential market", he added.

Zia Khatak told this scribe that media unavailability was the key problem, the company was facing to carry out its expansion plan in the province. He said, "We have requested PTCL for another line in Zhob and in Gwadar we already have the services and franchise.

Ufone launched its services in Balochistan in April 2003 and since then it has sustained a very rapid expansion. It is the second largest mobile operator in the province after Mobilink. "We need infrastructure to tap fully the highly potential telecom market of Balochistan", said Farooq Jabbar, the regional manager customer operations of Ufone in Quetta. He said, Last month, we launched our services to cover more areas in the Baloch belt including Panjgur, Turbat, Awaran, Bela, Wadh, Lehri and Shahrags. In Pashtoon belt, we have covered more areas including Sanjavi, Ziarat, Masai, Saigi, Barshor and Maizai Addah, he added.

Jabbar told this scribe that Ufone had plans to cover all the 26 districts in Balochistan. He expressed similar views about non-availability of media (fiber optic) in remote areas of the province. Government should take serious move to lay fibre optic in all the districts of the least developed province, as a modern, reliable and sound Telecommunications infrastructure also provides a boost to the economic activities in a region. Efforts are being made in this regard at official level. Pakistan Telecommunication Authority (PTA) is making telecom access available across the province. The total coverage of cellular or wireless network has reached 21 out of 26 districts indicating fast-growing cellular coverage in the province.

It is worth mentioning that the two projects of laying Optical Fibre from Quetta to Chaman and from Loralai to Dera Ghazi Khan have almost been completed by Pakistan Telecommunication Company Limited (PTCL). Other PTCL projects in the province include the placing of 2.5G system in Quetta, Karachi and Shikarpur, Optical Fibre Access Network at Quetta and Hub with 13,000 and 1000 lines respectively, provision of 18,552 lines on copper and WLL services in far-flung areas. According to an estimate, almost half of the population in Balochistan has access to either mobile or wireless or fixed line networks.

WLL services can grow at larger extent in the province since it is the most suitable and cost effective solution for scattered population and larger areas. WLL services have expanded in the province at a higher rate as compared to other services. Presently, out of all four WLL operators in the country, two have presence in Balochistan. WLL subscribers in the province have increased from a total of 435 in 2004 to more than 46,617 by last year. Total WLL density in the province is 0.60 per cent which was almost negligible in 2004.

SPAIN'S TELEFONICA TO BID FOR CONTROL OF BRAZIL MOBILE UNIT

Spain's Telefonica, which jointly controls top Brazilian mobile operator Vivo with Portugal Telecom, has made an offer for outright control, the Spanish telecoms giant.

According to a report carried by Financial Times, Telefonica chairman Cesar Alierta said that the Spanish group had made an offer for exclusive control of Vivo, without specifying financial details. Telefonica proposed 3.0 billion euros (4.1 billion dollars) and requested a response by August.

The FT said that Telefonica would likely sell its 10-percent stake in Portugal Telecom, which makes it the largest shareholder in the group, if the deal proceeded.

Telefonica has made major inroads into the burgeoning Latin American market, particularly Brazil, which is now the world's fifth-largest mobile market.

The Spanish group is present in a further 12 Latin American states. Telefonica is also seeking an indirect stake in Italian operator Telecom Italia and is targeting its Brazilian mobile unit, TIM Brazil.

Alierta, who said he foresaw cross-border consolidation of leading European telecoms groups, told the FT he was not out to merge Vivo and TIM Brazil because of competition problems. He would seek to establish an "industrial partnership" involving shared infrastructure, he said.

Such a partnership could deliver annual cost savings of 500 million euros each for Telefonica and Telecom Italia over the next four years, for example through joint purchasing of equipment.

On the Madrid stock exchange, Telefonica shares were trading up 0.24 percent late Tuesday morning at 16.77 euros in a market otherwise trading in negative territory.