Cellular subscriptions maintain growth

The mobile network operators have been consistently adding cellular subscribers to their networks since the exponential growth period ended. Latest data released by the Pakistan Telecommunications Authority reveals that nearly 11 million subscribers were acquired between July 2011 and May 2012, taking the tally to 119.86 million. As of May 2012, total teledensity had reached 72.1 percent, driven predominantly by the cellular mobile teledensity which stood at 68.6 percent. Fixed line subscriptions remained steady around three million subscriptions meant that the fixed line teledensity dropped by 20bps to come down to 1.7 percent in 11MFY12. Due to growth in subscriptions, the wireless local loop density improved by 20bps to reach 1.8 percent in May 2012. Nearly 120 million cellular subscription figure needs to be put in the right perspective though. These are the subscriptions that are active beyond 90 days, and as such exclude the dormant ones. The MNOs are said to be collectively acquiring over three million subscribers every month, but a very small percentage is that of first time users, including those in age groups above 60 and below 18. However, the number of active, unique subscribers is estimated to be between 70-80 percent of total subscriptions, owing to customers who have dual sim phones and multiple-sims and use Mobile Number Portability service. However, Pakistans mobile teledensity still looks impressive, above 75 percent, after deflating total subscriptions by 20 percent and excluding population below 10 and above 65 years of age. As for the market shares, it has been business as usual since Zong overtook Warid for number four spot earlier this year. Zong now appears to be holding tight with a market share of 13.82 percent, as it acquired more than half of the industrys new subscribers in 11MFY12. Warids share is in a state of perpetual decline, coming down to 11.5 percent, as it lost over 3.5 million subscribers during the period. Mobilink is still the leading MNO in terms of subscription-based market shares. However, its market share has declined by 58bps in the11 months ending May 2012, due to its share of only 24 percent in net subscriber additions during the period. Telenors market share increased by 45bps, Ufones by 79bps and Zongs by 378bps, during the period. It is obvious that the previous telecom policy framework has run its course and the 2G networks have done their bit. Simply put, the lemon has been squeezed dry. The voice and SMS tariffs are at very low levels, and not all the operators have a healthy bottom line. The telecom sectors contribution to the exchequer has stagnated in recent years, and FDI inflows to the sector have also dried up. Struggling to find any alternate revenue streams, operators eventually deduct all kinds of operator charges and service fees on account reload. The subscriber, who is already paying exorbitant taxes and duties on airtime usage, eventually loses a third of their moneys worth. This situation must change, soon! A great opportunity presents itself in the form of 3G spectrum auction - a potential win-win for the customers, operators and the government. Pakistan is already four years late in introducing this technology. Yet, it is highly unfortunate that there is little clarity over when and how the government will go ahead with the delayed license auction.

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Cellular sector Landscape
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Rank  MNOs         Market         Net
                   shares subscribers
                      (%)        (mn)
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1     Mobilink      30.07       36.05
2     Telenor       24.94       29.90
3     Ufone         19.65       23.55
4     Zong          13.82       16.57
5     Warid         11.51       13.80
                    Total      119.86
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(*as of May 2012) Source: PTA