Pakistan’s Mobile Industry: On the Growth Path

Posted on November 28, 2006
Filed Under >Babar Bhatti, Economy & Development, Science and Technology
35 Comments
Total Views: 132017

Share

Guest Post by Babar Bhatti

The overall consensus of industry analysts is that Pakistan is one of the countries with a huge untapped potential for telcom growth and an attractive investment environment. Recently Business Monitor International (BMI) ranked Pakistan as a key destination for telecom growth. The BMI rankings take into account a number of factors including industry situation, growth potential, competitive landscape and economy and political risks etc.

The sudden growth in subscriber base in Pakistan has caused network congestion and service quality problems. The major operators are responding to this problem by upgrading their networks. These multibillion dollar improvements, along with a regulatory effort to introduce Mobile Number Portability (MNP) next year, should maintain the stiff competition in Pakistan’s mobile market.

Pakistan is still an unsaturated market and with the falling cost of handsets there are plenty of new subscribers to compete for, especially in the rural areas. But eventually, as in saturated markets, if mobile operators want to avoid simply competing on price, they will have to compete on superior service, innovative features and ease-of-use. As an example of new trends there were so many text messages (SMS) sent on this Eid that the networks of all 6 companies were kept extremely busy!

Market SharePakistan has also had some strategic wins in the international telecommunication scene. This month Pakistan won the council seat of International Telecommunication Union (ITU) and Chairman Pakistan Telecommunication Authority (PTA) was elected as member of Radio Regulation Board of ITU. Pakistan also holds the office of President in Asia Pacific Telecommunity. ITU has also announced that it will setup a Center of Excellence in Pakistan for telecommunication regulation and policy.

There is still a long way to go for Pakistan’s telecom industry. Pakistan needs to increase telecom research and development work within the country. China and India are in the process of becoming world’s major R&D centers for technology and telecommunication. Two top Chinese telecom equipment firms have announced their plans to collaborate with Pakistan: Huawei is working with UET Lahore and ZTE will setup R&D center in Islamabad. The goal of the policy makers should be to increase the rate of transfer of technology from abroad, broaden the pool of local skilled workforce and accelerate the local production of telecom equipment and handset parts etc.

Mobilink

At the top of the list of Pakistani mobile companies is Mobilink, the Pakistani unit of Egypt-based telecom company Orascom. It has been in Pakistan since 1994. With 20 million subscribers it has the largest market share. Its shares are listed on the Egyptian and London stock markets (OTLD).

ufoneUfone, a wholly owned subsidiary of Pakistan Telecommunication Co. Ltd (PTCL), is now under the control of Etisalat group of UAE. With 8.8 million subscribers it is the runner up. For those in Pakistan it is the one company where they can easily invest locally.

waridtelIn third place is Warid, owned by the Abu Dhabi group of the United Arab Emirates and sister of Wateen group. With 5.9 million subscribers it controls 14% market of subscribers.

telenorNorway’s Telenor, a recent entrant with about a billion US dollar invesment in Pakistan has been doing well, based on its recent earning report. It has about 4.6 million subscribers or 11% of the market. Telenor stock is listed in the Oslo stock market (TEL) and Nasdaq NY (TELN).

Paktel and Instaphone are owned by Luxembourg based Millicom International Cellular (listed in Nasdaq as MIC). It is down to 1% of the subscriber share in Pakistan and according to recent news it is on its way out of Pakistan.

One sign of the growth burst of the sector in Pakistan and its self-confidence are the media ads of the various companies. As they fight for market share, that battle is being conducted over the airwaves and newsprint. It is hard not to notice the mobile phone advertising campaigns in Pakistan. The mobile phone and services advertisements are in the media, on billboards and everywhere else imaginable.

The quality and aggressiveness of the advertising campaigns indicates the level of effort to gain market share. According to studies Pakistan has been adding 2 million subscribers each month in 2006. The market segments mobile companies are targeting include:

  • tech-savvy youth
  • business users (due to the their higher average revenue per user)
  • first-time subscribers in remote and rural areas
  • previously ignored segments, for instance housewives and women

The ads are vibrant and colorful, conveying a sense of excitement and empowerment – but I did not find them very creative. The pretty picture these ads paint is separated from the real world where poor cellular service has led to PTA to announce that punitive action will be taken if problems persist.

Take a look at some of the recent advertisements and enjoy. The following four videos are of ads from Mobilink (Focus: Ringtones); Warid (Focus: 30-second Billing); Telenor (Focus: TalkShawk Package); and Ufone (Focus: General).




Babar Bhatti is a Telecom professional based in Dallas, Texas. See more at Babar’s blog: State of Telecom Industry in Pakistan

35 Comments on “Pakistan’s Mobile Industry: On the Growth Path”

  1. Owais Mughal says:
    November 28th, 2006 12:12 am

    Great post Babar Sahib. Very informative.

  2. Prophecy says:
    November 28th, 2006 1:40 am

    Is there any investment in manufacturing or technology transfer as well? – for instance Motorola setup cell phone plant in India to design and produce cheap sets for Asian markets , any one comming to Pakistan?

  3. November 28th, 2006 4:07 am

    AFAIK, there is no such transfer of technology but yes MOTOROLLA with Wateen Telecom did sign an agreement to setup a nationwide WiMAX network. It was covered worldwide by different news sources like Cnet and Slashdot etc.

    Intel again with Wateen Telecom,a sister company of Warid Telecom of Abu Dhabi Group is setting up call centers in different cities of Pakistan.

    The irony is that after all such *development* in Pakistan, one has to pay Rs.1,500 for 128kbps DSL line. For 1GB, you have to pay around Rs,5000. These are Cybernet ISP rates.

  4. November 28th, 2006 5:19 am

    Advertising campaign of mobile phones must be good in Pakistan thats why the reason we can see only one good representation of Pakistan in CNN- Europe is Mobilink advert., which shows the landscape and some Pakistani heritage in its advert. Otherwise I have never seen any single contribution for promotion in European Media of Pakistan tourism, govt. or any other business industry.

  5. November 28th, 2006 10:16 am

    Babar:
    Is there any hope for entrepreneurial activity in the telecom space in Pakistan? Are there any startups promoting new services etc or does it all happen within the larger telecoms?

  6. November 28th, 2006 1:24 pm

    Sadly there isn’t much transfer of technology or local manufacturing. We import near a million mobile phones every month. I have heard that Indian state-owned telecom company has made it mandatory for handset makers to produce 30% or so of the sets locally.

    Most of the activities seem to be around providing voice and internet services using imported technology (hardware and software). With more providers, new undersea cables by Transworld for increasing bandwidth and newer technologies such as Wimax the prices will eventually come down.

    Bilal – to answer your question, there is definitely hope for entrepreneurial activity in telecom industry e.g. software, security, sales/marketing. I am not sure how well Pakistan’s local equipment/hardware industry can compete with cheap and efficient markets of Asia.

  7. November 28th, 2006 2:47 pm

    Any idea who sang the Ufone commercial? I love the style. Very innovative! Better than most ‘pop’ music coming out of Pakistan that I have heard recently.

  8. Yahya says:
    November 28th, 2006 3:21 pm

    [quote comment="12708"]Any idea who sang the Ufone commercial? I love the style. Very innovative! Better than most ‘pop’ music coming out of Pakistan that I have heard recently.[/quote]

    I want to know that too. Searching on the lyrics brings nothing.

    We are pretty “batooni” people. No wonder telecom industry is on the growth path. :)

  9. TURAB says:
    November 28th, 2006 4:07 pm

    I would like to share a funny experience of my friend…

    So he was strolling down the road and saw and sewer (gutter) cover open…. All of a sudden out of no where this jamadar comes out yelling ” HELLO AWAZ NAHIEN AARAHI HAI?? NEECHAY SIGNAL NAIHEN AARAHA THA… MIEN 20 MIN MIEN WAHAN ATA HOON!”

    I think it is great to see technology trickle down to everyone in society… now only if we can stop mobile snatching… Which i heard kids are doing just for the thrill of it…. :(

  10. king_faisal says:
    November 28th, 2006 5:50 pm

    the explosive and entirely unexpected growth in pakistan’s telecom sector is an indication of what can be achieved in pakistan through a combination of right government policies and private initiative. growth would not have been possible without stability in pakistan’s macro-economic environment. furthermore govt’s policy with respect to the telecom sector provided further impetus to growth. just for comparison, after 50 years of independence, the number of telephone lines in pakistan stood at around 5 mm . in the next five years, no of lines went up by 3 mn and in the next 5 by 40 mm. pakistan’s tele-density is now 10% higher than india’s teledensity which stands at around 15%.

    individual credit for driving growth goes to naguib sawiris – the man behind egyptian company orascom which is the parent of mobilink. sawiris deserves accolades because:

    1. orascom put money in pak at a time when pakistan’s standing among investors was that of a leper.

    2. the growth achieved by mobilink due to business strategy and operational excellence. orascom was a relatively late entrant in pakistan’s mobile market. after orascom takeover over in 2001, mobilink was the entity most responsible for market expansion. since june 2005, mobilink has added 13 mm subscribers. this expansion was made possible due to rapid scaling up of the network, distribution channels and i.t. systems. mobilink’s success attracted two more players to the market. however mobilink still retains 50% market-share and is now expanding into other areas such as broadband.

    in contrast to the growth in mobile sector, performance of internet broadband sector has been very disappointing because govt’s policy has been all over the place esp on tariff. also this segment is dominated by the local wire-line utility.

    overall though telecom sector policies provide a blueprint for the sort of policies govt should implement in other sectors such as power.

  11. ahmed says:
    November 28th, 2006 6:47 pm

    I heard it was only Paktel going out of business Instaphone might just stay and what will happen to the consumers?

  12. king_faisal says:
    November 28th, 2006 7:53 pm

    on my last trip to pak, i saw this ad. for a mobile company, possibly warid, which was very tastefully done.
    the song in the background went “moray sawan aayo” (i think). this was one of the best pakistani ads i have seen and the song has stayed stuck in my head for a very long time. i will be very grateful if anyone can provide any details about this song such as artist, or name or link to video. thks.

  13. December 2nd, 2006 1:42 am

    I think we should keep into view the innovations that took place in MOBILE PHONE TECHNOLOGY. Rarely, we see a realtively new technology imporve service and being its cost down at the same time.

    Many innovations from Motorolla, Nokia and Ericsson are behind this factor. And then when these innovations meet the cheap labour countires, the growth really comes up to help tickel the technology down to the common man!!

    However, we must say keep the policies and initiatives a country would put in place to drive this economy. As with every big economic sector, tele-sector has brought windfall into many other local industries. I guess, the article highlighted the local advertising industry as one of them.

  14. Babar says:
    January 8th, 2007 6:20 pm

    Ahmed – Paktel’s future is still uncertain. For more info you can read:
    http://telecompk.wordpress.com/2006/12/11/future-of-paktel/

  15. Babar says:
    January 8th, 2007 6:22 pm

    Abrar – spot on. If executed right, these technologies can stir growth and opportunities. We have a long way to go. The digital divide is still a reality. See:
    http://telecompk.wordpress.com/2006/12/05/digital-divide-still-there-for-the-poorest/

  16. Babar says:
    January 23rd, 2007 11:46 am

    There are some interesting new developments: China Mobile has bought Paktel from Millicom.
    http://telecompk.wordpress.com/2007/01/22/china-mobile-buys-paktel/
    Now we have Europeans, Arabs and Chinese competing for Pakistan’s business!

  17. March 1st, 2007 3:06 pm

    dear king faisal u asked for “Moray Sawan aayo”

    it was sung by FUZON
    if u want i can send it to ur mail box
    but i havnt ur email ID
    so if u want then contact me at 0321-6820161 [malik imran Lahore pakistan]

  18. Mubashir says:
    March 13th, 2007 2:14 am

    hello to all
    my mane is Mubashir Minhas i am in gujranwala city and i am doing job in a private compny

  19. Mubashir says:
    March 13th, 2007 2:17 am

    hello to all
    my name is Mubashir Minhas i am in gujranwala city and i am doing job in a private compny

  20. Hafeez says:
    April 5th, 2007 8:05 pm

    The advances in this area have been quite spectacular in Pakistan.

  21. April 23rd, 2007 1:38 pm

    thanx babar bhai. it sat very much fit on my MPA(prev) thesis topic . i visited u first time.
    my next month topic would be on deffence forces as i m the part of PAF so i have selected myself this topic, so if u would have informative things 4 me, so plz i shall b very much thankful 2u.
    Flt Lt Armaan (armaani_jeanz@hotmail.com)

  22. Ahmad R. Shaid says:
    April 23rd, 2007 2:29 pm

    Pakistan’s mobile subscriber base crossed the 50 million mark in March this year. Assuming a total population of 170 million, with 40% urban, makes a total of 68 million urban population. Also assuming that the bulk of the mobile phones are in the cities, people in rural areas have much lesser buying power, apparently the urban market is about to saturate if it hasn’t already. Remember its also assuming that every old, young and child has a mobile phone. Also remember out of 170 million around 85 million are 19 years or less. Keeping in mind all these facts I don’t think that it would take much time for this market to saturate.

  23. Babar says:
    May 9th, 2007 6:34 pm

    Ahmad – rural areas are the focus of intense competition now. Nokia is creating cheap – but tailored with useful features such as easy sharing by multiple people – phones for rural masses of India. Some of my related posts on this are here:
    http://telecompk.wordpress.com/?s=rural

  24. Ahmad R. Shahid says:
    May 10th, 2007 5:34 am

    [quote comment="46667"]Ahmad – rural areas are the focus of intense competition now. Nokia is creating cheap – but tailored with useful features such as easy sharing by multiple people – phones for rural masses of India. Some of my related posts on this are here:
    http://telecompk.wordpress.com/?s=rural/quote

    That would be good if the rural people also get mobile and come on the moden communication bandwagon. Thank you for telling us about it.

  25. BaaDsHaH says:
    May 10th, 2007 9:53 am

    Plz Any One Send My “to Moray Sawan Ayo Song At My Mail faisal_p_a_k@yahoo.com plz Immediateeeeeeeeeeeeely

    thx in Advance After Al We R Pakistanis n we Rockkkkkkkkm LOlz

  26. GJ says:
    May 18th, 2007 12:43 pm

    For those asking who sang the Ufone commercial,its by Ali Charlie or Dino as he is commonly known of Indus Music fame.

  27. Babar says:
    June 23rd, 2007 8:23 am

    An update from the author of this post
    My blog has moved to a new site at:
    http://telecompk.net

  28. basit says:
    August 30th, 2007 12:56 pm

    The advances in this area have been quite spectacular in Pakistan.
    Da mobile industry in pakistan in growing every day…nd dere r no. of mobile companies now introduced in pakistan in a very short time…

  29. Owais Mughal says:
    August 30th, 2007 1:15 pm

    Basit yaar, there are >1000 posts on this page. Are you going to leave comment on all of them? :) (kidding). Please do so. We are happy that you are here and taking part in discussions and giving your opinion.

  30. Babar says:
    September 27th, 2007 9:02 am

    Another relevant post about the mobile progress & benefits:
    http://telecompk.net/2007/09/24/economic-and-social-benefits-of-mobile-services-in-pakistan/

  31. Maqsood Ahmad says:
    January 31st, 2008 4:41 am

    I wish sucess to all the mobile networks in pakistan.

  32. usman says:
    May 19th, 2008 4:46 am

    could some one be kind enough to send the song moray sawan aaio

  33. smillyz says:
    May 19th, 2008 1:31 pm

    yar i am trying to find the song moray sawan aayo, could someone kindly send me the song or tell me where to download it from, thanks

  34. November 13th, 2008 2:02 am

    the role of telecommunication in increase employment in pakistan.

    Reply

  35. PTCL EVO says:
    May 5th, 2011 11:39 am

    100 million mobile subscribers for a population of around 187 millions as of October 2010. So i dont think there’s too much room left for growth here.

    Currently the focus has shifted on broadband technologies.

Have Your Say (Bol, magar piyar say)