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Telecom sector awaiting balanced, healthy days

KARACHI - Rapid surge in investment in fixed-line, mobile networks and establishment of systems to aid in network growth has established Pakistan’s telecom sector as the third-fastest growing sector in the world a few years back. According to figures released by the Pakistan Telecommunication Authority (PTA), the telecom sector had remained one of the most potential sectors during the last six years and had contributed more than Rs 687 billion to the national exchequer besides providing a large number of employment opportunities to the unemployed youth of the country. The mentioned sector made its highest ever contribution during year 2011, when telecom companies and PTA together brought in more than Rs 117 billion to the national exchequer while Rs 109 billion were deposited last year, thus showing a 7 percent growth. In addition, taxes collected from the telecom sector remained the principal contributor to the overall tax collections made by the government. However, clouds of uncertainty had started hovering over the sector last year, particularly over the mobile phone companies, as cellular suspensions and some other factors made the year tough for operators as well as for subscribers. Previously, as a part of security measures, the government had banned the sale of Subscriber Identification Modules (SIMs) at retail outlets, thus cutting down a slice of the sector’s income. According to an estimate, the operators had to close down around 0.2 million retail outlets across the country in the wake of a new policy introduced to govern the practice of SIMs issuance, whereas two million SIMs were being sold every month, the figure for which had presently dropped down to around 0.7 million. Currently, around 1,800 franchises of all the mobile phone operating companies were working in the country, mostly in urban areas, thus creating problems for the rural areas subscribers in buying new SIMs. Experts told APP that the Average Revenue Per User (ARPU) for all mobile companies was currently only Rs 210 and the basic objective of the companies was to enhance the ARPU. “Companies invest to gain profit. In the current unfavourable environment, the companies might increase their tariffs besides controlling expenditures,” the experts said. One of the leading mobile phone service provider had already imposed call set up charges of 10 paisas on every call while at least two other operators had decided to follow the same in a couple of months. Furthermore, the experts believed that Mobilink would likely be at the top in terms of revenue generation, as after the introduction of new rules it would probably increase SIMs’ rates besides improving marketing tactics. Meanwhile, Ufone and Zong were likely to remain price efficient networks and would likely increase focus on “voice bundles” to attract additional subscribers. With “Easy-Paisa” at the top, there were chances that the other three operators would not compete on with each other over the prices. Instead they would focus on extending their reach to remote areas of the country. “Ufone might introduce mobile banking solution during the current fiscal year,” the experts informed. They predicted that the rates for mobile phone internet were likely to remain the same or could go further down during the ongoing year. It was also expected that Pakistan Telecommunication Company Limited (PTCL) would remain the dominant player as far as the broadband market was concerned. In addition, EVDO and DSL were likely to remain the favourite technologies for broadband users. EVDO would further strengthen its subscription base to attain around 35 percent market share in broadband market as compared to its current 30 percent shares. Furthermore, broadband rates were likely to remain unchanged. However, customers would be offered better download speeds to increase revenues for Internet Service Providers (ISPs).,A senior executive in a local mobile company, said he believed that mobile phone subscriptions which had reached a figure of around 122 million and with tele-density of around 69 percent would not show a substantial surge during the current year. He said it was necessary to give relief to the country’s telecom industry on issues like unverified SIMs, illegal international incoming traffic and same International Mobile Station Equipment Identity (IMEI) number for cell phones.

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