CHINA MOBILE TO TRIGGER INTENSE COMPETITION IN TELECOM MARKET
Mar 24 - 30, 2008
China Mobile, the world's biggest telecom operator, plans to grab a market share of 20-25 per cent this year by investing $800 million on network expansion to increase coverage area by several thousand miles in Pakistan. Entry of China's telecom giant in the highly competitive Pakistan telecom market of 77 million cell phone users has alarmed the already existing mobile phone operators in the market and raised hopes among the consumers expecting new incentives from all the mobile companies as a result of ensuing competition.
China mobile is likely to trigger an intense competition in the Pakistan telecom market, which is already dominated by six cellular operators with over 75 million subscribers. Mobilink with 30 million subscribers, the Ufone with 16 million customers, Telenor with 15 million customers and Al-Warid with 14 million subscribers are likely to prove tough competitors of China Mobile in the market. All the companies are currently trying to take edge on each other and the competition is benefiting the subscribers, who are getting advanced and new packages at low prices.
According to the latest figures of the PTA, the number of cellular subscribers in the country has increased to 80 million with a cellular mobile density of 50.76 by February 2008. Approximately 4 million subscribers were added during the two months of this year. The figures show that Mobilink led the market with 31.36 million subscribers followed by Ufone, which was serving 16.84 million people across the country. Telenor Pakistan holds the third position with 16.01 million subscribers and Warid is at the fourth with 13.60 million subscribers. Meanwhile, the aggressively marketed Paktel has managed to grab 2.14 million subscribers. There is a very close tie between Ufone and Telenor. Telenor is at 3rd place with a difference of only 833,640 subscribers.
Pakistan is the first venture of China Mobile outside China. It is operating as CMPak Limited and plans to provide seamless connectivity all over Pakistan. It has already invested $500 million in the country and announced that its service will soon be available all along the Karakoram Highway (KKH). Last year, China Mobile entered into the Pakistan telecom market through acquisition of Paktel Limited ñ a local mobile communications operator- for over $460 million enterprise value. It has officially taken over Paktel Limited after paying Rs 1.9 billion, which includes $29.1 million as installment of Initial Licence Fee (ILF) and charges related to spectrum allocations and technical services.
Being a member of the international computer network and the world's largest GSM mobile communications provider, China Mobile is authorized to provide international networking services in 59 countries. With a registered capital of 51.8 billion RMB yuan and assets of over 400 billion RMB yuan, it is the largest among all the overseas listed Chinese companies and among all the telecom carriers in Asia.
Pakistan is taking lead in Asian economies in terms of telecommunication penetration. Telecom is currently a high-growth industry in the country recording an addition of two million mobile subscribers every month. The number of mobile phone subscribers has crossed the figure of 77 million. Mobile companies have been registering phenomenal growth with more and more people subscribing their services. First half of the ongoing fiscal has witnessed seven per cent growth in teledensity.
Since the liberalization and deregulation of telecom sector in 2003, scores of new private entrants are gearing up to provide service, making Pakistan one of the fastest-growing cellular markets. Three years back, there were less than 2000 cell sites installed by all mobile operators for provision of mobile services. According to the Pakistan Telecommunication Authority (PTA), the total cell sites of all mobile operators have currently increased to more than 17,500. By the end of last year, teledensity (Fixed line) had reached to 13.2 percent, which was just 2.1% in 1999. Pakistan plans to increase fixed-line teledensity to 7 percent (around 10 million fixed lines) by 2010. The target can be achieved by installing up to 1 million additional lines annually.
The telecom sector has been the largest FDI recipient in Pakistan during the last three years and attracted many global telecom giants to invest in the country. According to the PTA, telecom sector has received $363.9 million foreign direct investment in the first quarter of the current fiscal year, which is 37.71 percent of the total foreign resources pumped into Pakistan's economy.
Local analysts still see a great margin of growth in the industry, as the network coverage of almost 90 percent of the total population of Pakistan has made the industry even more attractive for foreign investment. Analysts say the upward trend of investment may continue in the next five years because of large market potential, particularly the rural areas where operators have to roll out their network.
China Mobile recently 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.
COVERAGE & EXPANSION PLANS
After 100 percent acquisition of Paktel, China Mobile 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 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.
The company recently signed 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 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.
The company has also 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. The agreement has enabled China Mobile to 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. It also plans to set up the most modern telephone exchange in Quaid-i-Azam Industrial Estate (QIE) in Pakistani city of Lahore.