Last few years have been dubbed by analysts as lackluster for the telecom sector, which initially grew exponentially following its deregulation in 2004. Declining ARPUs, constricting margins and rising taxes, all choked the bottom lines, even as sponsors kept close tabs on fresh investment. The sector seems to go on in its cruise control mode, as the latest statistics suggest. After much delay, the Pakistan Telecommunications Authority updated its data on the telecom sector, earlier this week. PTA statistics show that total teledensity-the sum of cellular, fixed local loop (FLL) and wireless local loop (WLL) teledensities-had reached 68.6 percent by the end of October 2011. In line with the global trend, the FLL segment continued its declining run in Pakistan, as the FLL teledensity came down to 1.8 percent in October 2011 from 1.9 percent in June 2011. The WLL teledensity also declined to 1.6 percent in October 2011 from 1.7 percent in June 2011. Telecom experts state that although FLL operators lost over two million subscribers since deregulation, the volume of traffic in minutes grew considerably. However, the top lines of FLL operators, like PTCL, kept on declining over the years due to shrinking voice tariffs on fixed lines. Something similar happened to the LDI segment too. A large market of 14 LDI operators couldn find a direction and gradually distorted the pricing structure for international incoming voice traffic. Adding to the ado, unscrupulous operators have been undercutting their revenues by installing illegal gateways. All these years, the thrust for the sector has, naturally, come from the mobile telephony segment. Mobile teledensity had improved to 65.2 percent by October 2011. During the four months ended October 2011, mobile network operators collectively added 2.23 million subscribers, taking the overall tally above 111 million. Active subscribers are believed to be between 70-80 percent of the total. Much like in 2010-11, Zong helped expand the subscription pie further during this period. It appears that Zongs gain was Warids pain, as the Chinese firm added 2.24 million subscribers, and managed to consolidate its market share in double-digits. Warid lost 1.4 million connections during the period, therefore, its market share dropped below 15 percent for the first time since 2006. Telenor consistently acquired another 0.94 million users and improved its market share a notch. Mobilink and Ufone also added some subscribers to their networks, yet their market shares dropped slightly. The sector is bracing up for the anticipated developments of 2012. The license auction of the now-defunct Instaphone-which has been kept open for both existing and new players-could potentially lead to a sixth active MNO in a market where, perhaps, very little is left to fight as far as tariffs and "share of voice" are concerned. Many telecom analysts and professionals believe that the real game-changer would be the rollout of third-generation data network technology. This would usher in the era of high-speed "mobile broadband" in Pakistan, a new market of a sort that holds immense promise for both customers and service providers. As things stand, up to three 3G licenses are planned to be put up for auction in March this year. "In the post-3G milieu, the sector as a whole is set to undergo an inevitable realignment. It will be harder for the remaining 2G operators to survive in a different market, forcing their sponsors to rethink and weigh their options," predicted a telecom expert. These are interesting times for the whole telecom sector, and not just MNOs. Lets sit back and watch!
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Cellular sector comparison*
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Total
Rank MNOs Market Subscribers
shares (%) (mn)
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1 Mobilink 30.18 33.54
2 Telenor 24.84 27.61
3 Ufone 18.74 20.83
4 Warid 14.38 15.99
5 Zong 11.85 13.17
Total 111.13
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Source: PTA *as of Oct. 2011
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