Fixed broadband (wire-line, fiber-optic-based Internet) is the foundation of modern digital economies. However, here in Pakistan, it is mobile broadband (3G and 4G-based wire-less Internet) that has been fulfilling that key enabling role due to encouraging policies and corresponding investments in this space. (It’s another matter that promoting mobile broadband has often come at the expense of fixed broadband). No wonder there are high hopes of mobile broadband and its service providers in Pakistan.
As per the latest data from the telecommunications watchdog, the Pakistan Telecommunication Authority (PTA), there were nearly 120 million mobile broadband subscriptions as of August-end 2022. That’s a healthy growth rate of 16 percent year-on-year on top of a high base. Between August 2021 and August 2022, it is estimated that the absolute increase was of 16 million+ subscriptions.
Despite challenging market conditions and macroeconomic uncertainties, the fact that mobile network operators (MNOs) have expanded mobile broadband subscriptions by well over 1 million subscriptions per month is no small task. Could they do more? Possibly! There are likely to be over 90 million ‘unique’ mobile broadband subscribers in Pakistan, as previous research has shown that every third Pakistani is holding onto two subscriptions/Sim cards. That leaves a vast addressable market waiting to be served.
What about data consumption? The PTA has started reporting mobile broadband usage data as well. For instance, data usage in Pakistan via mobile broadband networks surged to 2,269 petabytes in the Jan-Mar quarter earlier this year, which was 30 percent higher than during the same period in early 2021. During entire CY21, data usage stood at nearly 8,000 petabytes, signifying strong double-digit growth year-on-year. (Disaggregated data usage patterns are not available yet – PTA, take note, please!)
Usage per subscriber has also increased significantly in recent years, as per PTA data. Back in 2017-18, average data usage per subscriber stood at 2.1GBs per month. By 2020-21, average usage had tripled to 6.1GBs per subscriber per month. More recently, during August 2022, monthly data usage by a mobile broadband subscriber stood at 7.2GBs, a nearly double-digit increase compared to the same period of the last year. While it appears there is a slowdown in growth, let’s wait for more data to confirm it.
While mobile broadband subscriptions and usage have clearly grown, the PTA data show that the average revenue per user (ARPU) from mobile broadband services has not picked up with the same intensity. For an MNO, an average data user may be worth less than s/he was a year ago. As per most recent available data, mobile broadband ARPU stood at Rs221/month in the Oct-Dec quarter of 2021, which was a decline of 6 percent year-on-year in nominal terms – and a sharper drop in real terms!
Difficulties in monetizing data revenues seep into future investment decisions. No wonder the telecom sector FDI has remained abysmal in recent years. PTA data show that there were 43,131 4G sites at December-end 2021, which shows addition of 6 percent (just 2,256 more sites) compared to December-end 2020. With fixed broadband present in just over 5 percent of households, the 4G sites are not expanding fast enough to meet broadband demand, especially in under-served and un-served areas.
In recent years, both before Covid-19 and during/after, MNOs have expressed their inability to inject large investments, unless the ‘ease of doing business issues (especially those related to taxation, spectrum prices and import duties on telecom equipment and smartphones) are resolved. But there continues to be an impasse, as the government of the day has gotten even bigger fiscal issues on its plate than the last government did. The status quo may has further negative implications for ‘inclusion’ in the digital economy.
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