2011 Pakistan - Telecoms, Mobile, Broadband and Forecasts

Mobile Broadband on the way in Pakistan

With the mobile market moving slowly in Pakistan, a massive surge in broadband internet is underway on back of increasing application of wireless access.

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 slowed, the focus has shifted to the broadband internet; there has been no significant activity in fixed-line services as originally intended.

As the government moved away from the old state-owned monopoly to a new competitive structure, its initial target was to lift the national fixed-line teledensity from 2.5% to 7% by 2010. In fact, only 4% had been achieved by 2010. 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 introduction of Wireless Local Loop (WLL) services and the licensing of a multitude of WLL operators. This technology has been both expanding the fixed subscriber base and substituting for wireline services. WLL services constituted around 50% of the total fixed-line subscriber base by 2011.

In the meantime, the deregulated market with its emphasis on competition was providing strong support for what became an extended boom in the mobile market. This boom continued until the national economy started to falter in 2008/09. Whilst the mobile sector continued to grow through this period, it has been at a much slower rate. Since quietly reaching the 100 million subscriber milestone in 2010, the mobile market has been growing in 2011 at a rate of around 5% per annum. Compared with other markets, this slowing happened at an early stage with the national penetration only slightly more than 60%. On a positive note, mobile networks were already covering more than 90% of the population and this coverage was continuing to be expanded.

Meanwhile, with slowing subscriber growth, mobile operators have started to shift their focus to value-added services in order to earn increased revenues. Five active operators were fighting for a share of the mobile market, forcing down prices and subsequently Average Revenue Per Unit (ARPU). At the same time, debate over the viability of 3G in Pakistan continued and there was considerable opposition to the plans set out by the Pakistan Telecommunications Authority (PTA) for issuing 3G licences. The regulator was proceeding with its plans.

The attention of the internet market in Pakistan has swung sharply to broadband. For a long period internet access had been heavily dependent on dial-up services and penetration had remained low; broadband services were almost non-existent. However, in 2007/08 there was a major upturn in broadband subscriptions. This has continued, with 2010 witnessing a huge surge (in excess of 100% growth) in broadband services. A feature of the rapid expansion of the broadband subscriber base has been the key role played by wireless broadband technology. The various wireless platforms being offered supported around 50% of the broadband services in operation by early 2011. It is noted, however, that broadband penetration remains relatively low – still less than 1%.

Whilst broadband and internet services are growing rapidly, this sector of the market has proved controversial as the government considers how much control there should be on internet content and access. In 2010 the government directed that the monitoring of websites for ‘anti-Islam content’ be undertaken by the PTA, the telecom regulator. The major websites which would be monitored for anti-Islam content included Yahoo, Hotmail, MSN, Bing, Amazon and YouTube. The webpage links already being blocked included those of Facebook, YouTube, Islam Exposed and Jehad.org.

The big challenge in the short term for Pakistan’s telecom market will be to manage the impact of a pronounced downturn in the national economy. There had been a huge dip in Foreign Direct Investment in telecommunications as the overall foreign investment in the country suffered a significant reduction.

Key highlights

• Despite an overall slowing in its telecom market, Pakistan continued to grow in the mobile sector;
• Having passed the 100 million subscriber mark (just over 60% penetration) in 2010, mobile subscriber numbers were growing at between 4% and 5% in 2011, modest indeed compared with the earlier boom years;
• The country’s deregulated structure was certainly working well in the mobile segment of the market, with five operators competing vigorously for a share of the subscriber base and the revenue;
• Whilst Pakistan’s broadband Internet penetration still remained low in relative terms (a broadband subscriber penetration of less than 1% coming into 2011), 2010 had witnessed a huge surge (in excess of 100% growth) in broadband services. This strong growth phase had begun in 2007 and was continuing through 2011;
• Growth in the country’s fixed-line market remained sluggish; fixed teledensity stood at less than 4% into 2011 with the numbers expected to only edge up slightly in the short term;
• One positive factor in the emerging fixed market has been the success of wireless local loop technology which was supporting almost 50% of all fixed subscribers by mid-2011 and still growing.

Pakistan: - key telecom parameters – 2010 – 2011

(Source: BuddeComm)

Note: ¹Estimates for both 2010 and 2011. 

Data in this report is the latest available at the time of preparation and may not be for the current year.