Teledensity nearly flat, but long-term growth ahead

All those heavy marketing expenses seem to have failed to attract new cellular subscribers as the growth in cellular subscription remained lacklustre at the end of the first quarter while market shares of all the telecom players virtually stayed stagnant at June 2009 level.
On a month-on-month basis however, Ufone witnessed a slight decrease in its customer base - down 0.5 million in September, in contrast to other cellular players whose growth was marginally positive. Consequently, total mobile subscription base grew by a negligible 0.13 percent and pushed teledensity to 58.6 percent.
In the wake of declining subscription growth rate since 2007, the price war between cellular firms has been of great benefit to consumers who are being offered attractive new packages and value added services.
This near-saturation level in the backdrop of slowing growth and the recent initiative launched by Pakistan Telecommunication Authority to block unverified SIMs may keep the growth in subscriber base under pressure in the near term.
But while it may be true partially in the short-term for voice segment there is still plenty of room available for subscription growth in the medium to long term owing to the tilt in population demographics towards young and middle age people amid increasing urbanization.
The industry also has the potential of tapping the late technology adopters such as housewives and elderly people by easy to use technology, likely available in local languages in the future. Plus, declining mobile set prices, particularly, with the arrival of inexpensive Chinese mobile phones, the subscription rate in rural untapped community can increase substantially.
There is an exuberant growth potential in data segment, as the countrys far-flung rural areas remain untapped by conventional banks - a gap which can easily filled by cellular companies through m-banking given their spawning geographical presence virtually in every part of the country.
The recent launch of branchless banking by Mobilink and Telenor in Pakistan, and the success of m-banking solutions elsewhere in other developing economies point to the same direction. Although, owing to low literacy and high rural population it may take close to a decade to realize the full potential, the potential to increase teledensity and bringing it at par with other developing economies surely exists.