For 3G and 4G subscriptions (referred to here as ‘mobile broadband’), the year 2021 seemed like a solid encore to the performance seen in the first pandemic year that was 2020. The latest statistics from the Pakistan Telecommunication Authority (PTA) show that the number of mobile broadband subscriptions had reached 108 million at the end of December 2021, a yearly growth of nearly 20 percent for CY21.
Despite a high base, the fact that mobile broadband subscriptions continue to grow in double digits is an encouraging development for digital adoption in Pakistan. Still, the size of un-served market appears to be large. Assuming every third mobile broadband user owns two connections (Multiple-Sim Phenomenon), then the number of “unique users” comes to 81 million at the end of December 2021.That would signify roughly a third of adult population is yet to be served by mobile broadband networks.
Then there are millions of teenagers who are joining the addressable market every year. That’s as much an opportunity as a challenge. Reaching out to (and adequately serving) the next 40 to 50 million subscribers would require mobile network operators (MNOs) to make significant investments in 4G networks.
But the investment inflows have been running dry, amplifying the issues around network quality, even as the government’s revenue-centric approach continues to trump sector development.
There is a need to migrate tens of millions of 2G users to 3G/4G networks. During 2021, 48 percent of mobile devices on Pakistan’s networks were 2G devices and 52 percent were smartphones, as per the PTA.
The share of 2G devices has dropped in recent years, but it is still a large chunk. While the operators are at work to hasten the much-needed transition towards mobile broadband, the government’s growing tax incidence on mobile airtime and devices are counter-productive for digital adoption. (For more on that, read “Mini budget and telecoms,” published January 6, 2022).
The market leader Jazz continues to dominate the playing field, boasting 42 million mobile broadband subscriptions and a market share of 39 percent as of December 2021. Zong with 30 million subs commands 28 percent share; Telenor with 24 million connections has a 22 percent stake; and Ufone possesses a 10 percent slice of the pie, holding 11 million subscriptions. Relative to 2020, Jazz market share improved in 2021, Telenor’s remained the same, whereas Ufone and Zong saw slight declines.
During CY21, the MNOs collectively added 16.4 million mobile broadband subscriptions to the mix. Nearly half (46%) of those new subscriptions were accounted for by Jazz.
This demonstrates the operational scale and marketing muscle of the largest operator, which acquired Warid Telecom five years ago and made timely investment in new spectrum.
About a quarter of new annual additions went the way of Zong, over a fifth of new subs were collected by Telenor, whereas Ufone’s relevant share was 5 percent.
The MNOs’ battle for 4G subscriptions is expected to become even fierce in 2022, as their fortunes (ARPU) depend on high-spending data-hungry customers to adequately monetize data networks, which have become increasingly expensive to maintain and expand.
Whether or not service quality will improve this year remains to be seen. Let’s see if the government puts back on the market the large, unsold spectrum (from the September 2021 auction), and whether the top three operators finally go for it.
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