A series of new reports and data releases points towards the need for a major move in Pakistans telecom industry: investment in telecom and technology infrastructure. There is no denying that the pace of growth in cellular subscriptions has slowed of late with tariffs sliding sharply in the recent past amid high competition between the players.
Consequently, the average revenue per user (ARPU) per month of cellular businesses has been under pressure, despite a steady growth in top line revenues. This is partly because the subscribers are highly skewed towards low revenue generating prepaid packages with 98 percent concentration. And even within this segment, the major use is in non-voice services chiefly the SMS.
The tightening situation can be gauged from PTAs comments, made in its 2009 Annual Report, that out of all the five mobile operators, only Ufone registered a profit of Rs1.7 billion during 2008-09, and the rest of the companies recorded financial burden due to heavy running expenses.
So, while there might still be a room to penetrate further, given the low cellular teledensity in Balochistan and N.W.F.P, its safe to construe that the future of telecom lies in value added services such as music, information, etc, and in other hybrid offers like m-banking and broadband.
There are less than half a million broadband subscribers in Pakistan as compared to over 80 million subscribers each in China and US. A recent survey by the U.N revealed that there are about 19 million users of internet in Pakistan with many still using dial up connection - implying that there is a great growth potential in the sector.
And the signs of growth are in; just last year broadband subscription grew by 150 percent. With the popularity of WIFI and the spillover of technology that has substantially reduce DSL rates, Business Monitor International expects Pakistan broadband subscribers to reach 21 million by 2013.
These germinating conditions quite naturally require consistent investment in equipment and technology - something that is currently being imported by telecom operators. And this is where the future growth possibly lies.
There is going to be consistent demand for technology, not just based on current trends but also the fact that the telecom and technology industry is growing globally as well. Besides, attracting investment in technology and equipment manufacturing business can have a positive spillover affect on other industries that need technology to boost their business and come at par with their global peers.
Agreed that the manufacturing of highly sophisticated equipments might be a long way to go, but thats what strategic policy making is all about - something the econ wonks at the Board of Investment and the Infrastructure Development Bank, currently planned to be set up by the central bank under public-private partnership, should be thinking about.
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ARPU/month ($)
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Mobilink Telenor Ufone Warid Zong
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FY07 3.80 4.00 2.80 2.50 3.30
FY08 3.50 3.90 2.10 2.70 1.60
FY09 3.04 2.80 2.20 1.83 1.52
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