This report provides a comprehensive overview of the trends and developments in the telecommunications market in Pakistan. Subjects covered include:
- Key Statistics;
- Market and Industry Overviews;
- Regulatory Environment and Development;
- Major Telecom Players (fixed and mobile);
- Mobile Voice and Data Market;
- Internet, including VoIP;
- Broadband (fixed, wireless, mobile);
- Scenario Forecasts (fixed-line, mobile and internet subscribers).
Researcher:- Peter Evans
Current publication date:- November 2013 (19th Edition)
With a rudderless regulator, Pakistan’s telecom industry continues to wait for the 3G auction
Mobile operators in Pakistan have started to shift their focus to value-added services as slowing subscriber growth starts to impact. The operators have therefore been especially keen to see the issuing of 3G licences. The government had started a process to assign these licences back in 2007. By late 2013 however there had been no licences issued. Delay after delay had occurred, much of which had not been properly explained by the authorities.
In the meantime, the Pakistan Telecommunications Authority (PTA) was without a chairman and key board members. A local court had found that the initial appointment of the chairman did not follow established procedures for an openly advertised role and the incumbent was removed from the position. The situation that evolved where the regulatory authority was unable to act on a range of issues was nothing short of chaotic.
The 3G fiasco combined with the PTA leadership problem presented an ominous cloud over an otherwise energetic telecom sector in Pakistan.
The progressive implementation of the Pakistan government’s reform plans over a number of years has triggered a period of strong growth in the local telecom market. Up until recently the energy and growth was predominantly in mobile services; as the mobile market moderates, the focus has shifted to broadband access in its various forms. In the meantime, there has been no significant activity in fixed-line services as originally intended and in fact subscriptions in this sector are in decline.
Earlier on Pakistan’s telecom market struggled with the transition from a regulated state-owned monopoly to a deregulated and competitive environment. The government initially focused on fixed lines setting out ambitious plans to increase fixed-line teledensity. After peaking at around 4% in 2008, fixed penetration had fallen to 3.5% coming into 2012. And, at the same time, the majority of these fixed lines were in urban areas. A more balanced distribution is certainly desirable in the longer term as 70% of Pakistan’s population lives in rural areas. Some good news in the fixed-line market came with the arrival of Wireless Local Loop (WLL) services and the licensing of a multitude of WLL operators. This technology has helped sustain what there is of a fixed-line segment. WLL services constituted around half of the total fixed-line subscriber base by 2012.
Meanwhile, the focus of the market changed; the whole telecom landscape in Pakistan having shifted to mobile services with a phenomenal expansion occurring in this sector from 2005/2006 onwards. The number of mobile subscribers jumped from less than two million to 100 million in just eight years. Interestingly, despite the significant tightening of the national economy during 2009 the mobile market continued to expand at an annual rate of between 5% and 10%. The mobile networks were already covering well in excess of 90% of the population and this coverage was continuing to be expanded.
While mobile penetration was strong and continuing on its positive growth path, internet penetration remained at relatively low levels coming into 2012. Broadband growth had been of particular concern with almost negligible growth for many years; finally, 2008/09 saw a promising upsurge in broadband subscriptions and this fresh growth pattern growth looked to be continuing, boosted by the spread of competition throughout the market and the increased adoption of wireless broadband solutions. Broadband penetration remained relatively low, however, still sitting below 2%.
Control of internet content remained a big issue in Pakistan. The government has directed that the monitoring of websites for ‘anti-Islam content’ be undertaken by the PTA, the telecom regulator. By 2012, amid growing concern about greater restrictions on internet access in the country, the Human Rights Commission of Pakistan (HCRP), an independent body, said that already about 13,000 sites were inaccessible. The regulator said that the figure was closer to 2,000 sites. By 2013 the censorship of the internet by the government was becoming more intense.
- Despite an overall slowing in the country’s telecom market, Pakistan continues to grow its mobile sector;
- Mobile subscriber numbers were growing at close to 10% annually in 2011/2012, modest growth indeed compared with the earlier boom years;
- By mid-2013 there were around 125 million mobile subscribers for a penetration of 70%;
- Five mobile operators were competing vigorously for subscribers and revenue, all being able to claim a reasonable share of the market;
- Fifth-ranked Warid Telecom, however, was struggling and by 2013 was being put up for sale by its owner the Abu Dhabi Group;
- After many delays, 3G licensing looked as if it was proceeding in earnest with the auction scheduled for late 2013; it was more likely to be early 2014;
- To allow the spectrum auction to happen as planned the Prime Minister had approved relevant policy directives in October 2013;
- While Pakistan’s broadband internet penetration remained low in relative terms (less than 2% by mid-2013), there has been a significant surge recently in broadband services;
- The growth in wireless-based broadband has been especially important, representing around over 50% of subscriptions by 2013;
- Growth in the country’s fixed-line market remained sluggish, fixed teledensity standing at just over 3% in 2013, the numbers having actually fallen at times;
- One positive factor in the fixed market has been the success of wireless local loop technology which was supporting just over half of all fixed subscribers and looked to still be growing.
Data in this report is the latest available at the time of preparation and may not be for the current year