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GROWTH IN TELECOM SECTOR

GROWTH IN TELECOM SECTOR INTRODUCTION:

Since the inception of Pakistan, basic telecom services were being provided by a monopolist, previously called as Telephone and Telegraph department (T&T). The department was being run by the government and played multiple roles as regulator, policy maker, operator and service provider in the country. The T&T department was later converted into a corporation. Althoughthe corporation was earning huge profits from the services, it was re-investing the same profitsinto the sector for the provision of more telecom service but the investment was not enough.Further, with the technological advancement, more and more telecom services were becomingavailable but there was not enough money available with the corporation to install new telecomsystems for the provision of modern services. Resultantly, a digital divide prevailed in Pakistankeeping it behind its neighbors and other comparable countries in terms of telecom access.The unprecedented growth and development in the telecom sector in Pakistan is the result of efficient regulation and policy-making on the part of the government and PakistanTelecommunication Authority (PTA), besides business friendly investment policy, favourableenvironments and pressure free autonomous role in promotion of telecom services in the country.Since its inception in 1996, the Authority has adhered to the effective policies. It has takenquantum leaps, making spectacular scores by winning promising investments and honour athome and from abroad. Under Telecom Reorganization Act 1996, Pakistan TelecommunicationAuthority (PTA) was established in January 1997 to regulate the establishment, operation andmaintenance of telecommunication systems, and the provision of telecom services.Cellular mobile services in Pakistan commenced in 90s when two cellular mobile telephonelicenses were awarded to Paktel and Pak Com (Instaphone) for provision of cellular mobiletelephony in Pakistan. Currently there are six cellular players in the market. There has been atremendous growth in Cellular market. By the end of 2007 cellular mobile services wereavailable in 7011 cities/towns and villages.

GROWTH OF TELECOM SECTOR IN PAKISTAN:

Although tremendous growth has taken place in the Pakistan telecom sector but most of it can beattributed to the cellular growth. Fixed line is still awaiting a take off. Similarly Value AddedServices have grown but are still a drop in the bucket. Now that the competition has beenintroduced in the telecom sector some very positive impact have been observed on the growth of the sector in a short span of time which is expected to continue to grow for at least next fiveyears if the daring investors influx continue as in the last 3 years. A brief account of the growthin telecom sector is given below.

RESEARCH METHODS

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GROWTH IN TELECOM SECTOR

HISTORY OF MOBILE SECTOR IN PAKISTAN:

Cellular mobile services in Pakistan commenced in 90s when two cellular mobile telephonelicenses were awarded to Paktel and Pak Com (Instaphone) for provision of cellular mobiletelephony in Pakistan.Four years ago, when the telecom sector was deregulated, Pakistan’s teledensity was only 4.3 percent, which now stands at 45.1 percent. This report casts a glance at the unprecedentedgrowth of the cellular sector in (July-June) fiscal year 2007 and envisages the future growth prospects of this sector.The number of cellular users grew by a massive 83 percent to 63 million in the country, makingPakistan one of the world’s fastest growing telecom markets. Neighboring country India also hada similar growth phenomenon as it witnessed 73 percent growth in cellular subscribers over theyear.After the arrival of Warid and Telenor, a strong growth and a stressful competition has been seenin the telecom industry. Telenor and Warid, registered 200 percent and 118 percent growth intheir subscriber base in FY07, respectively. They were followed by Ufone and Mobilink with 87 percent and 54 percent growth, respectively. On the other hand, the other two service providersPaktel and Interphone remained laggard.Currently there are six cellular players in the market. There has been a tremendous growth inCellular market. By the end of 2007 cellular mobile services were available in 7011 cities/townsand villages.

MOBILE SECTOR:

Telecom industry has shown significant improvement since its liberalization was initiated inJanuary 2004, with an unprecedented growth in mobile sector.Pakistan, over this period has remained fastest growing domestic market across Asia althoughother regional countries are performing well but, Pakistan has been experiencing more than150% continuous growth rate for last two years, which is unseen elsewhere.Mobile sector which is now driven by lowest tariffs, maximum coverage, and relatively better quality the Pakistan mobile market maintained rapid growth during 2007. The newly deregulatedmobile market is now working on sustaining the mobile boom that hit Pakistan 2 years back andon the brink of adding Value Added Services to increase ARPU along with customer satisfactions.Currently, the mobile sector is undergoing intense competition among the six mobile operators.In this scenario and in the best interest of their long term sustainability, mobile operators are nowforming strategies driven towards being at lowest cost, extensive network coverage andconnectivity, innovative products and segmentation. Value Added Services have becomeimportant over last two years.

RESEARCH METHODS

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GROWTH IN TELECOM SECTOR

Steady growth saw addition of more than two million mobile subscribers every monththroughout the last year. Network coverage of almost 90% of the total population of Pakistan hasmade mobile industry even more attractive for foreign investment. Pakistan has emerged as oneof the fastest growing mobile markets among the developing nations. This year the sector grew by 80% whereas average growth rate in last 4 years has been more than 100%. Today totalsubscribers have reached 76.9 million (Dec 2007) whereas it was 34.5million in 2006 and12.7million in 2005. Figure-1 shows the subscribers growth of different Cellular MobileOperators. Figure-1 Cellular Subscribers Growth

COVERAGE AREA BY MOBILE SEVICE PROVIDERS:

RESEARCH METHODS

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