CELLULAR SERVICES IN PAKISTAN
Research Analyst, PAGE
Apr 12 - 18, 2010
Pakistan mobile market hosts some of the world's largest and most experienced telecom companies including Orascom, Telenor (Norway), Warid Telecom (Abu Dhabi Group), China Mobile, and Etisalat, a UAE based company.
These companies have heavily invested in Pakistan to lay down the infrastructure and take mobile services to every nook and corner of the country.
With the encouragement by government of Pakistan and best efforts by the regulator as well as the determined mobile operators, the sector has recovered from slow growth of past few months. There is escalation in mobile penetration up to 57.4 per cent, as the total mobile subscribers have reached to 94.3 million, with more than 90 per cent of the country having mobile service access.
REGIONAL COUNTRIES MOBILE PENETRATIONS (2007-09)
COUNTRIES 2006-07 2007-08 2008-09 Malaysia - 87.8 100.8 Pakistan 40.1 55.6 58.2 Sir Lanka 21.5 - 55.24 India 11.3 20.7 37 Bangladesh 19.83 24.9 27.9 Nepal 5.26 - 15.4
Cellular phone is the only segment that showed an encouraging growth pattern during a tough financial year for 2008-09
Mobile operators kept on expanding their service areas and new subscribers also continued to join the networks. Today, the total mobile penetration stands at 58.2 per cent, showing a growth of 6.4 per cent this year. As the companies had been aggressively expanding their networks and offering attractive packages during the past two years, the average growth remained more than 50 per cent.
During FY09, the international financial turmoil and saturation in metropolitan areas caused low increase in penetration. Nevertheless, if the mobile penetration in Pakistan is compared to that of the regional countries including India, SriLanka and Bangladesh, Pakistan remains far ahead of them.
The mobile services remained more popular in Sindh and Punjab with almost 66 per cent and 62 per cent mobile penetration respectively. The NWFP has total penetration of 37 per cent, while in Balochistan, the penetration remains 31 per cent. During the year, the penetration in Punjab, Sindh and NWFP increased by 6 per cent, 6.4 per cent and 37 per cent respectively, whereas Balochistan suffered a negative growth of 16 per cent due to poor security situation and relatively lower buying power of the people.
The security situation in the NWFP too remained worst during FY09, but it was expansion in networks by the telecom operators that significantly increased the penetration.
In highly competitive sector, market share is a strong parameter to show degree of competitiveness in the sector. For a long time, Mobilink remained the market leader with a significant difference, both in terms of subscribers and revenues with rest of the operators.
However, Mobilink lost its share by 15 per cent this year whereas the rest of the operators showed increase in their market share. Telenor has the second highest share in the market (22.2 per cent) in terms of subscribers followed by Ufone (21 per cent) and Warid (19 per cent).
COMPANIES 2007-08 2008-09 Mobilink 36.39 30.88 Telenor 20.59 22.15 Ufone 20.56 21.20 Warid 17.60 18.96 China Mobile 4.49 6.77 Instaphone 0.36 0.04
Analyzing the market share of each operator by revenue, Mobilink remained the leader again followed by Telenor and Ufone. During FY09, all the companies lost their share in total revenue of the industry except Ufone and China Mobile as their shares appreciated from 15 per cent to 19 per cent and 1 per cent to 4 per cent respectively.
Pakistan has been an investor-heaven especially for telecom sector for a few years. The investor friendly environment makes the country home to world telecom giants like Orascom, Telenor, Warid Telecom, Singtel and the latest addition China Mobile. These companies had been investing heavily in rolling out their networks with a pace of more than 90 per cent.
Although the last financial year did not prove to be very exciting one for the operators, and the total investment decreased by 48 per cent, the operators took it as a temporary setback. Even in such a discouraging situation, the companies like China Mobile and Ufone have increased their investment in the reported year.
Zong plans to invest US$500 million more or so in the coming year to roll out the infrastructure all across the country.
Mobilink has substantially cut down its investment to more than 70 per cent, followed by Telenor and Warid reducing investments up to 33 per cent and 65 per cent respectively. The major contributor to the total investment made in the mobile segment turned out from Telenor that invested around US$374 million.
Pakistan's mobile cellular segment had been growing at a very fast pace; however, recently, the signs of slowdown have indicated slow growth in subscriber base, penetration and revenues.
Pakistan would hopefully cross the number of 102 million subscribers by the next two year. However, in order to address low ARPUs, the need to boost data usage has increased. The operators are putting in their best efforts to introduce data service, but the low local content availability and high low-income prepaid base is not allowing them to grow on data services. Hopefully, once 3G licensing is completed, the subscribers would be in better position to use enhanced data service on better speed, and the business community will be benefited largely from it.