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!
Pakistan 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.
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).
Ufone, 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.
In 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.
Norway’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
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.
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…. :(
[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. :)
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.
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.