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This report provides a comprehensive overview of trends and developments in Pakistan’s telecommunications market. The report analyses the Telecoms Infrastructure, mobile, fixed broadband, and Digital Economy sectors. Subjects include:
- Market and industry analyses, trends and developments;
- Facts, figures and statistics;
- Industry and regulatory issues;
- Major players, revenues, subscribers, ARPU;
- Broadband, VoIP
- Mobile voice and data markets;
- Broadband (FttH, DSL, wireless);
- Mobile, broadband and fixed line forecasts to 2021
Despite Setbacks Pakistan’s Mobile Market Continues to Grow
Pakistan’s telecom market had been struggling for a long time with the transition from a regulated state-owned monopoly to a deregulated competitive structure. Internet penetration remained low across the country. Broadband growth had almost been negligible for some years, but there were some positive signs in recent years. The big change has been the arrival of mobile broadband in 2014. This has boosted overall broadband growth, helped also by the intense competition in the market place. The granting of 3G and 4G licences has certainly changed the broadband landscape.
The fixed line market in Pakistan remains underdeveloped due to the dominance of the mobile segment. Further, the number of fixed telephone lines is slowly declining as the mobile segment continues to expand. Overall penetration dropped from 2.6% in 2014 to 1.6% in 2015 and 1.3% in 2016.
The World Bank and the Asian Development Bank (ADB) have also both been active in providing capital for country’s telecom sector. This contributed to a number of telecommunications projects, most of which have been involved in the laying of fibre optic cable and the installation of digital electronic switches. Pakistan has also had a universal access policy, which, among other things, was been aimed at expanding rural coverage by providing a phone in every village. Almost 70% of the country’s population live in rural areas. But, as with most developing countries, growth of telephone services has been concentrated in the big cities. Up to 90% of fixed lines had been installed in urban areas. Of these, over 50% were in the three largest cities. In an effort to redress this imbalance, the government launched a project to provide payphones in villages throughout the countryside.
Pakistan’s mobile market has experienced moderate growth over the last five years. Mobile penetration has risen from 64% in 2011 to 73% in 2014, however then declined marginally to 71% by 2016, due to a mature market and very strong local competition. Also the government issued an urgent directive in early 2015 requiring re-verification of SIMs by the mobile operators which saw a sharp drop in mobile subscribers. The move was specifically aimed at countering the actions of criminals and terrorists. The process meant that SIMs not verified were blocked, resulting in a dramatic fall in mobile subscriber numbers. Slow growth is predicted over the next five years to 2021.
Growth opportunities in Pakistan are very substantial due to a young population here and rising penetration of mobile services. The country’s five active mobile operators - Mobilink, Ufone, Telenor Pakistan, Warid and Zong - were all fighting for a larger share of the market, forcing down prices and subsequently Average Revenue Per Unit (ARPU). The operators were shifting their focus to Value Added Services (VAS) in order to improve revenues.
In November 2015 Vimpelcom signed an agreement to merge Mobilink with Warid Telecom. Under the terms of the agreement, Mobilink will acquire 100% of Waird’s shares, in exchange for which Abu Dhabi Group (the owner of Warid) will take approximately 15% of the shares in Mobilink. In May 2016 Sector the PTA gave conditional approval to the merger of mobile operators Mobilink and Warid and the transaction was completed in July 2016. The legal merger of the two companies is expected to be completed within the next 12 to 18 months. 4G network rollouts continue across the country. In August 2016 Telenor Pakistan launched its 4G network in selected areas of Karachi, Lahore, Islamabad, Peshawar, Multan, and Faisalabad as well as parts of the Swat district.
Internet access has been available in Pakistan since the mid-1990s. PTCL started offering access via the nationwide local call network in 1995. Coming into 2015, despite the long incubation period, internet penetration in the country remained low, with only 15% of the population estimated to be users. Fixed broadband penetration is Pakistan remains very low. Penetration increased from 0.5% in 2012 to 0.9% in 2015 and 1.0% in 2016. Over the next five years to 2021 moderate growth is expected from a small base. Fixed broadband penetration is predicted to increase from 1.0% in 2016 to between 1.3% and 1.5% in 2018 and 2.0% and 2.4% in 2021.
There were signs that this was changing, however. The country has been pursuing an aggressive IT policy, aimed at boosting Pakistan’s drive for economic modernisation. Although sometimes the policies being applied seem inconsistent, there is no doubt that the government’s general efforts have been helping increase the popularity of the internet. Of special significance has been the administration’s provisioning of e-government services. Nonetheless, despite the huge potential of the local market, much work still needs to be done. Broadband access in particular remains limited (with a fixed broadband subscriber penetration of under 2% by 2015), but this sector of the market was finally starting to expand, having been given a massive boost with the arrival of mobile broadband.
- total investment in the country’s telecom sector was steadily picking up after hitting a low point;
- government efforts to exercise control over the internet continue to draw criticism;
- the E-Government Strategy is ongoing, as Pakistan tries to lift its lowly ranking;
- mobile broadband services have totally overwhelmed the fixed broadband sector of the market;
- after widespread opposition, the plans for the new tax were cancelled;
- Public Call Offices (PCOs) numbers fell dramatically
- Zong released plans to invest between USD300 million and USD400 million to extend 3G and 4G coverage to 100% and 60% respectively by the end of 2016.
- The PTA auctioned a single concession for 850MHz frequencies
- Zong’s 4G offering was growing steadily but still with relatively small number of subscribers;
- mobile banking was offering expanded opportunities for entrepreneurs;
- operator Zong complained to the PTA of distortion problems experienced in its allocated spectrum.
Companies mentioned in this report:
Mobilink (PMCL); Ufone (PTML, PTCL’s subsidiary); Telenor Pakistan; Warid Telecom; Zong (CMPak); Instaphone. Pakistan Telecommunication Co Ltd (PTCL); PakNet; Wateen Telecom (subsidiary of Warid Telecom); Trans World Associates (TWA); NayaTel; LinkdotNet; Orascom; TeleCard; WorldCall; Mytel; Wi-Tribe; Qubee; Dancom Pakistan; National Telecommunications Corp (NTC).