Pakistan Telecom and Mobile Sector, Comparison of UFONE, MOBILINK, WARID, TELENOR, ZONG

PAKISTAN TELECOM SECTOR

The government has planned to present a consolidated telecom policy in early 2009, the two policies of telecom sector namely, mobile and fixed line would expire this year and the third telecom policy relating to Broadband would expire in 2009. The government has also planned to increase software exports up to $5 billion by the end of 2010. The current level of software export was about $50 million per annum.

The Competitiveness Support Fund (CSF) released the 'WEF Global Information Technology Report 2007-2008'. The report ranks Pakistan 89th out of 127 countries in terms of nation's preparedness to effectively promote business, improve investment climate and develop infrastructure.

Due to levy of sales tax on computers and related accessories in the 2006-07 budget, the total import of PCs and servers in the country was 630,000 units, which dropped to 149,000 units at the end of 2007, thus registering a decline of 40 percent.

PAKISTAN TELECOMMUNICATION AUTHORITY

Chairman PTA said that the process of awarding the licenses would be completed by the end of this year. He also said that Mobile banking and mobile commerce would be next step in telecom. The first International Mobile Commerce Conference in Karachi organized by PTA and Total

Communications. PTA has directed the Callmate Telecom Company Limited to clear half of Rs 132 million dues within six months otherwise its license will be terminated. The total payable dues are Rs 132,996,701 against the company.

PTCL PRIVATIZATION

The Supreme Court of Pakistan, through a constitutional petition, was moved against the privatization of the PTCL and several other steps taken by the Etisalat Group, the buyer of the company. The Auditor General of Pakistan has pointed out that delayed privatization of PTCL, reasoning its value plummeted from $8 billion to $2 billion.

PAKISTAN IT AND TELECOM AWARDS

PTCL won the Best Banking Technology Award and the Best Stall Award at the Pakistan Banking Expo 2008. Omantel and Worldcall Telecom Limited announced finalization of acquisition by the former of majority stake in the latter. Under the deal, Omantel is acquiring 488.8 million (65 percent of available) shares of Worldcall. Of this, 451.2 million shares are from sponsors while 37.5 million are being purchased from the public through the securities markets. NetSol Technologies Ltd has won 8th Teradata National IT Excellence Award in the field of software exports for the year 2006.

NEW PROJECTS IN IT AND TELECOM SECTOR OF PAKISTAN

Nokia inaugurated its regional office in Karachi, and US Ambassador to Pakistan termed the launch of Apple Computers in Lahore as a big achievement. Ericsson brings 3G Taking You Forward Roadshow in Pakistan.

MOBILE SERVICES

The unstoppable escalation in subscribers seems to halt here, as the growth rate has declined to 21% approx. The rate of growth has slowed, 1.3 million sims were added in June, compared with the average of around 2 million per month from Jan - May of „08. Thanks to political uncertainty, inflation rate, judges and list goes on…

A total of Rs235, 613 million in revenue was generated by the telecom industry in 2007 which had a major impact on the economy of Pakistan. The sector is also currently contributing 2 per cent out of the 7 per cent of GDP and in 2006-07; more than $1,824 million were invested in Pakistan into the telecom industry through FDI, making it a major driver of economic growth.

PTA has deposited more than Rs 50 billion in exchequer besides 291 million dollars as license fees while mobile phone companies are depositing more than Rs 101 million annually as direct taxes.

In 2007, telecom remains the sole sector within the economy to have received such a substantial investment, making it 35 per cent of the overall FDI in the country. But FDI declined sharply during the third quarter of current fiscal from 290.4 million dollars in the second quarter to 156.6 million dollars in the third quarter and stood at 810 million dollars for the nine month of current fiscal.

Nonetheless, despite all the above mentioned facts, one has to acknowledge the growth in telecom sector, while you read this Market update, a new subscription will increase the cellular mobile density in Pakistan, which is 54.7% with the figures of more than 86 million subscribers (PTA Report) in June 2008. Addition of total Cellular Subscribers in each company are:

MOBILE PHONE OPERATOR COMPARISON

The mobile subscriber numbers for last few months tell an interesting story. Zong and Telenor have been growing at a brisk pace, at the expense of Mobilink and Ufone. Take a look at the April to May changes. Mobilink.s share of market is down to 37%.

But in June, Warid fought back by adding the largest number of subscribers. Telenor and Zong seem to be losing some steam after a few months of high subscriber intake. Mobilink continues at sluggish pace. Ufone and Telenor numbers remain extremely close to each other.

The number of cell phone subscribers' grew at the pace of 1.5 percent in June to 88 million, as compare to 1.96 percent to 8.67 million in May 08 and 3.0 percent in April 85.0 million subscribers.

MOBILINK

Rumor is that Vodafone might take charge of Mobilink, as the management of Mobilink shows great interest to sell it off. This might not be a bad decision because cellular market in Pakistan has matured and maximum Mobilink can do is to play defensive.

Mobilink has launched WiMAX from the first of July, 2008 in Karachi, and planning to launch other metros by the end of this year, with the brand name Mobilink Infinity. Mobilink is expected to receive shipment of Zyxel CPEs by Q4 with shipment volumes likely to reach 30,000-50,000 units.

Following are the details.

1. Built-in wi-fi for indoor & Outdoor CPE.

2. Unlimited Download / upload for 3 months.

3. Free Call on any mobilink numbers.

4. Providing ZyXeL (Equipment CPE Alcatel) to customers.

Mobilink is offering very competitive monthly tariffs when considering that PTCL is offering 1 Mbps at 2000. Mobilink is offering 1 Mbps at PTCL‟s tariff for 512 kbps at 1200, but CPE cost is still very high for common people, reasoning slow penetration.

Mobilink will equip 160 APIS systems at 30 railway stations nationwide which will display the arrival and departure timings of all up and down trains including the status of delayed trains.

UFONE

There is a rumor in market that DoCoMo will enter into Pakistani market through Etisalat controlled Ufone, as they announced some serious partnership talks with Middle East‟s telecom carriers including Etisalat, and Saudi Telecom.

Even with the subscriber base of more than 15 million, it looks that Ufone is not standing on strong grounds financially, as she signed Rs 4.5 billion Syndicated Term Loan Facility agreement with NBP and HBL.

Ufone launches different packages and different services to keep her alive during last 3 months. She has launched UExcel, a program for undergrad students in collaboration with the School of Leadership (SoL), UStocks mobile stock information service, offering Al-Jazeera news service, launched BlackBerry service, launched connection and handset bundle. But none of these offers stop them to fall at number 3 from 2.

TELENOR

With the splendid growth and numbers growing to 18,125,189, Telenor is amazingly grabbing the market slowly. Right now they are at number 2 position as compare to warid (number 4), though they both started their operation in Pakistan almost together. It has been also said that Telenor has the best HR among all the telecom companies.

Telenor Pakistan has recorded impressive results increasing the revenue by 80% compared to the same period in 2007.

WARID

Warid fought back by adding the largest number of subscribers of 375,180 in June with the total of 15,489,858. Warid telecom has signed a contract with Emitec Mobile Solutions (EMS) for end-to-end Blackberry support.

Warid Telecom Pakistan plans $5 billion investment to improve its services in the country, total investment in Pakistan will touch $1.5 billion by the end of this year while the company will further increase its investment in the telecom sector by $1 billion by the end of 2009. Company has also changed the logo.

Warid Telecom awarded a $300 million contract to Sweden's Ericson to expand and upgrade its GSM/GPRS network in Pakistan, and announced its commercial launch with AeroMobile an in-flight connectivity solution provider partnered with Emirates Airlines. Warid has started LBS services.

She is offering free McDonald meal with top up, coping Vodafone‟s campaign (SMS Lounge) in Germany.

ZONG / CHINA MOBILE COMPANY

China mobile company has invested $721 million in telecom sector in Pakistan during 2007 and it would further invest $7 million in Pakistan this year. Touching the 4 million figures, Zong is doing ATL and BTL activities extensively. Trying to make service and rates as simple as possible, they are relying on simple formula to enter in the Red Ocean, i-e, low price, extensive advertising and far-reaching distribution channels.

Zong is covering the cities of Gilgit, Hunza, Skardu, Besharn and Sust. It has added over 2000 sites since its launch and the network cell sites have grown from about 900 to over 3000 today. By the end of 2009, the cell sites are targeted to grow to over 10,000.

Report By: By Khurram Mahmood Noon