CHINA MOBILE EXPANDING ITS NETWORK IN PAKISTAN
BY SYED FAZL-E-HAIDER
Sep 17 - 23, 2007
China Mobile has entered into a multi million dollar agreement with Wateen Telecom (Pvt) Limited, Pakistan's first and largest private sector complete communication and media solutions company, for the use of Wateen's state-of-the-art fibre optic cable network laid across the length and breadth of the south Asian country. Under the deal, China Mobile will utilize a single pair of dark fibre on Wateen's fibre optic network, on an indefeasible right of use (IRU) basis, for the purposes of offering its cellular mobile services all over the country. The agreement is expected to bring a new telecom revolution to offer the people of the country better services.
After its 100 percent acquisition of Paktel a mobile communications operator in Pakistan the world telecom giant China Mobile has embarked on its plans for introducing tariff package and aggressively expanding its network in the country where the telecom firms are already facing cut-throat competition. It has officially taken over Paktel Limited after paying Rs 1.9 billion, which includes $29.1 million as installment of Initial License Fee (ILF) and charges related to spectrum allocations and technical services.
The company has transferred $700 million to Pakistan as the first chunk of its $2 billion investment plan during the next three years. Instead of operating with the Paktel, it has introduced new brand name, China-Mobile Pakistan (CM-Pak) for its operations in the country. It has signed a $500million contract for network expansion with four leading vendors, Alcatel-Lucent Pakistan Ltd, Ericsson Pakistan Pvt Ltd, Huawei Technologies Pakistan Pvt Ltd and ZTE ZhongXing Telecom Pakistan Pvt Ltd. With this agreement, China Mobile, in its first venture outside China, will now extend its services into the Northern Areas of Pakistan. The company has awarded the expansion contract to four different vendors that will act as its strategic partners to execute the most aggressive expansion plan in the history of Pakistan.
China-Mobile Pakistan (CMPak Limited) is currently working on the plan to set up an entirely new network. The company is making billions of dollars investment in Pakistan and is spreading a network in all big cities to start a mobile service. The company also plans to set up the most modern telephone exchange in Quaid-e-Azam Industrial Estate (QIE) in Pakistani city of Lahore. It has plans for infrastructure development and investment in the expansion of Paktel. According to the company's Chief Executive Officer (CEO) in Pakistan, the company has planned to make Paktel as one of the leading telecom operators in the country within the next couple of years. It has already made plans to add around 2500 new basic transmission stations every year to achieve maximum coverage and make itself competitive in Pakistan's telecom market.
CMPak Limited has introduced power package, which is a new tariff package offering its subscribers 50 paisas per 30 sec on net, which are the lowest call rates in the market from 7 pm to 10 pm. Under the package, a customer can enjoy three friends and family numbers for the same rate throughout the day. The package also offers the longest happy hour duration three hours as opposed to others and there are no monthly charges for this package. The company has designed its packages specifically in accordance with its aim of bringing the best quality at the lowest rates to the customers. It intends to introduce more economical packages in coming days.
China Mobile is poised to go ahead with its future investment plan and has submitted the same to Pakistan Telecommunication Authority (PTA). It plans to invest $2 billion up to 2009 to expand its network by installing 2500 'towers' each year across the country. It also plans to install total 7500 towers by 2009. The entire investment would come from China, and no loan would be taken from the banks in Pakistan. Pakistan telecom market is already dominated by six cellular operators with over 40 million subscribers. Pakistan is a high-growth telecom market where the number of mobile phone subscribers have grown to 46 million by the end of last year. Since Pakistan has deregulated the telecom sector, scores of new private entrants are gearing up to provide service making the south Asian country one of the fastest-growing cellular markets. The government plans to increase fixed-line teledensity to 7% (around 10 million fixed lines) by 2010. The target can be achieved by installing up to 1 million additional lines annually.
In January, the China Mobile struck a deal with Millicom International at a cost of $284 million to take over Paktel. Millicom is an international investor in cellular telephony services particularly in emerging markets. China Mobile entered into an agreement with Millicom to buy 88.86 per cent of the outstanding shares of Paktel Limited through the transaction that implied an enterprise valuation for the Paktel Limited of $460 million. The company agreed to pay approximately $284 million, which included the repayment of intercompany debt, to the Millicom subject to the completion of transaction.
Today, Pakistan has the presence of leading Chinese telecom giants- ZTE Corporation and China Mobile. ZTE Corporation has grown in Pakistan over 400 percent in terms of human resource and office space. It is China's largest listed telecommunications equipment manufacturer and wireless solutions provider with year-on-year growth of 34%. ZTE Corporation is one of the largest telecommunications manufacturers and wireless solutions providers in China. It is China's second-biggest telecom equipment vendor. It was listed on the Shenzhen Stock Exchange on mainland China in 1997 and on the HongKong Stock Exchange at the end of 2004. ZTE was the only Chinese IT and telecoms manufacturer listed in Business Week 2005¥s Information Technology 100, and was included in its 2006 ranking of China's Top 20 Brands. Today, it is China's only listed telecoms manufacturer, with shares publicly traded on both the Hong Kong and Shenzhen Stock Exchanges.
Pakistan telecom has currently become a highly competitive market and every market player is planning a continuous expansion to remain stay on the top. The number of mobile subscribers in the country has jumped to 60.9 million with cellular density, rising to 39.16 percent. According to recent statistics, during May, the mobile phone subscribers in Pakistan increased by 2.6 million and the total subscribers' base jumped to 60.9 million that attributed to new telecom policy, which has broken the over five-decade-old monopoly of Pakistan Telecommunication Company Limited (PTCL). The telecom sector's share almost three percent in the total GDP growth in the previous fiscal year against 1.93 percent contribution to the sector made during 2003-04 on rising tele-density and increased interests of foreign players in the country's telecom market, experts said. A huge investment of 950 million dollars in the country, contributed by six cellular companies, ie Mobilink, Ufone, Telenor, Warid, Paktel and Instaphone during 2005.
Pakistan's telecom sector has attracted record inflow of Foreign Direct Investment (FDI) during the last three years, which has crossed 3 billion dollar mark. This is continuing and new companies are investing in their network and infrastructure build up. In the infrastructure companies including Telecom Malaysia are laying optic fibre cables. Telekom Malaysia has plans to invest more than 100 million dollar in laying their optic fibre connecting more than 107 cities of Pakistan. According to the quarterly report of PTA, the telecom sector attracted 472 million dollar FDI during the last half year in which only 133.2 million dollar was under privatisation proceeds of Pakistan Telecommunication Company Limited (PTCL). About 72 percent of telecom FDI is purely new investment mostly in expansion of infrastructure and services and eliminates the misconception in some quarters that privatisation is the dominant component of FDI in telecom.