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Cellular sector in Pakistan: Achievements, challenges & the road ahead

Cellular sector in Pakistan: Achievements, challenges & the road ahead. Contents. Mobile Sector: a History Contributions by Mobile Sector: Achievements Challenges: More to come? What lies ahead …. Background: the road to subscriber growth. Mobile Cellular Policy - 2004. Deregulation

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Cellular sector in Pakistan: Achievements, challenges & the road ahead

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  1. Cellular sector in Pakistan: Achievements, challenges & the road ahead

  2. Contents Mobile Sector: a History Contributions by Mobile Sector: Achievements Challenges: More to come? What lies ahead …

  3. Background: the road to subscriber growth Mobile Cellular Policy - 2004 Deregulation Policy – July ‘03 • Decision to convert erstwhile T&T to corporation (PTC) • Award of licenses to 2 Cellular Mobile operators • Conversion of PTC into PTCL, creation of government operator NTC, Regulator PTA, Frequency Allocation Board (FAB) • Approval of Cellular Mobile Policy • Issuance of licenses to 2 new Cellular Mobile, 12 LDI, and more than 76 LL operators through open auction • Granting of another GSM based Cellular Mobile license • PTCL exclusivity for fixed line telecom sector terminated • Privatization of PTCL through selling of 26% strategic shares to Etisalat ‘90 ‘92 ‘98 ‘03 ‘04 ‘05 ‘06 • Licenses granted to two new subsidiaries of PTCL namely PTML (4th Cellular Mobile Operator) and Paknet (ISP) • PTCL privatization process restarted

  4. Key Highlights • Building communication infrastructure • 91% of total population covered • Cell sites: 26,300 (<2,000 in ‘04) • Amongst the fastest growing telecom markets • >90million subscribers (5m in ’04) • Cellular Tele-density: approaching 60% (3.29% in ’04) • Unprecedented Investment • Over $9b in FDI and continuing … • Highest by any sector • >30% of all total FDI in the past 5 year

  5. Contributions to the Customer • Accessibility • Widespread reach across Pakistan • Multiple Distribution Channels • Affordability • Handsets < Rs.1,000 • One of lowest calling rates in the world • Connectivity & Convenience • 24x7 support • 99% on prepaid

  6. …Contributions to the Customer • Product innovation • SMS, MMS, ring back tones, Information portal, call blocker, e-load,Photo Express, Music services, Mobile TV, GPS tracking services, etc • Serving the underserved: USF Fund and roll outs • …

  7. Contributions to the Consumers

  8. Contributions to the Economy • Spurring employment • Total eco-system provides employment to over 1m people • 200K of them highly skilled • 12K of them directly with CMTO’s • Part time students (Call Centers) • Increase in productivity • Communication infrastructure • Secondary growth effect on other industries • Banking, media, construction

  9. Contributions to the National Exchequer • Efficient Tax Collector • More than Rs. 120b annually • 6% of total taxes collected by FBR • GST, withholding tax, income tax • Universal Service Fund Contribution: • Approximately PKR. 11 billion • R&D Fund Contributions: • Approximately PKR. 4 billion

  10. Contribution to the Community • Considerations for social, ethical & environmental impact of products • Exemplary leadership and response to national challenges • 2005 Earth quake relief • IDP Support • Khuddar Pakistan • all inclusive work environment • DUA Project • Donate Blood – Save A Life

  11. Unprecedented Challenges since 2008... • Economic • Exorbitant Inflation (30% in ‘08) • Rising Fuel Costs (80% since Jan 08) • shortages (Tariff Hike by 31%) • Devaluation 34% since ‘08 • Increased Cost of borrowing • Political & Governmental • Deteriorating law and order • cumbersome / multiple approvals for cell sites required • Load shedding (12 Hours / day) • Luxury tax

  12. Unprecedented Challenges since 2008... • Regulatory • Taxation • discriminatory GST, dual taxation on SIM Activation Tax, Import duty on handsets • 3G Auction/licensing process • Costs of compliance (NADRA) • Competitive • 5 competitors • analyst are of the view that this market warrants 3- 4 cellular operators • Tariff war • whilst there are no lowered QoS relaxation • Increasing media spending / clutter

  13. Going Beyond Consumer Expectations

  14. Delighting the Consumer

  15. Broadband & 3G • PTA has set a throughput of 128kbps as the required speeds to qualify as being categorized as Broadband • The United Kingdom has set this as 2Mbps • 3G offered by PTCL as Evo product, offering ~3Mbps • based on CDMA IS-95 evolution • The conventional evolution of GSM systems to broadband with mobility is via the UMTS standard • Today, almost all operators with a 3G spectrum opt for HSPA as the preferred technology • The GoP is due to give formal approval for PTA to formally auction the UMTS specturm

  16. GoP’s R & D fundThe industry-academia link • As per license conditions, cellular operators put aside 0.5% of revenue to the National ICT R&D fund • …

  17. Thank you

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