A BUDDECOMM REPORT PAKISTAN TELECOMS, MOBILE, BROADBAND AND FORECASTS 18th Edition Researcher: Peter Evans Copyright 2012 Published 04 September 2012 Paul Budde Communication Pty Ltd Tel 02 4998 8144 – Int: 61 2 4998 8144 5385 George Downes Drive Fax 02 4998 8247 – Int: 61 2 4998 8247 BUCKETTY NSW 2250 Email: [email protected] AUSTRALIA Website: www.budde.com.au Pakistan - Telecoms, Mobile, Broadband and Forecasts Disclaimer: The reader accepts all risks and responsibility for losses, damages, costs and other consequences resulting directly or indirectly from using this report or from reliance on any information, opinions, estimates and forecasts contained herein. The information contained herein has been obtained from sources believed to be reliable. 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For information regarding permission, please write to: Paul Budde Communication Pty Ltd, 5385 George Downes Drive, BUCKETTY NSW 2250, AUSTRALIA. © Copyright Paul Budde Communication Pty Ltd, 2012 Website: www.budde.com.au Pakistan - Telecoms, Mobile, Broadband and Forecasts EXECUTIVE SUMMARY EXECUTIVE SUMMARY The 3G fiasco has been an ominous cloud hanging over Pakistan’s otherwise energetic telecom sector 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 moderates, the focus has shifted to broadband access in its various forms. In the meantime, there has been no significant activity in fixed- line services as originally intended and in fact subscriptions in this sector are in decline. Earlier on Pakistan’s telecom market struggled with the transition from a regulated state-owned monopoly to a deregulated and competitive environment. The government initially focused on fixed lines setting out ambitious plans to increase fixed-line teledensity from 2.5% in 2002 to 7% (around 10 million fixed lines) by 2010. This target became impossible to achieve in time. After peaking at around 4% in 2008, fixed penetration had fallen to 3.5% coming into 2012. 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 arrival of Wireless Local Loop (WLL) services and the licensing of a multitude of WLL operators. This technology has helped sustain what there is of a fixed-line segment. WLL services constituted around 50% of the total fixed-line subscriber base by 2011. Meanwhile, the focus of the market changed; the whole telecom landscape in Pakistan having shifted to mobile services with a phenomenal expansion occurring in this sector from 2005/2006 onwards. Over the same planning period that the government was setting its fixed line target – from 2002 to 2010 – the number of mobile subscribers jumped from less than two million to 100 million. Interestingly, despite the significant tightening of the national economy during 2009 the mobile market continued to expand at an annual rate of between 5% and 10%. Subscriber numbers had increased to 120 million by early 2012. The mobile networks were already covering well in excess of 90% of the population and this coverage was continuing to be expanded. While mobile penetration was around 70% and continuing on its growth path, internet penetration remained at relatively low levels coming into 2012. Broadband growth had been of particular concern with almost negligible growth for many years; finally, 2008/09 saw a promising upsurge in broadband subscriptions and this fresh growth pattern growth looked to be continuing, boosted by the spread of competition throughout the market and the increased adoption of wireless broadband solutions. By the start of 2012 broadband services made up around 40% of all internet subscriptions. Broadband penetration remained relatively low – still less than 1% - by that stage. For the wider view of the online market, although estimates vary, there were around 16 million internet users in the country by early 2012. This was a huge jump from around 0.5 million users a decade earlier. As already noted, the dominant mode of internet access remained dial-up for the moment, although this was most assuredly about to change. Meanwhile, with slowing subscriber growth, mobile operators have started to shift their focus to value- added services. In this regard, the operators were not surprisingly keen to see the issuing of 3G licences. The government had started a process to assign these licences back in 2007. By early 2012 however there had been no licences issues. Delay after delay had occurred, much of which had not been properly explained. By May 2012 the regulator was saying that 3G licences were unlikely to be awarded until the end of 2012 when the long-awaited frequency spectrum auction would be held. The 3G fiasco has generally presented an ominous cloud over an otherwise energetic telecom sector in Pakistan. Control of internet content remained a big issue in Pakistan coming into 2102. Back in 2010 the government directed that the monitoring of websites for ‘anti-Islam content’ be undertaken by the PTA, the telecom regulator. By March 2012, amid growing concern about greater restrictions on internet access in the country, the Human Rights Commission of Pakistan (HCRP), an independent body, said that already about 13,000 sites were inaccessible. The regulator said that the figure was closer to 2,000 sites. © Copyright Paul Budde Communication Pty Ltd, 2012 1 Website: www.budde.com.au Pakistan - Telecoms, Mobile, Broadband and Forecasts EXECUTIVE SUMMARY Market highlights: Despite overall slowing in the telecom market, Pakistan continued to grow its the mobile sector; Mobile subscriber numbers were growing at around 10% annually in 2011/2012, modest growth indeed compared with the earlier boom years; By mid-2012 there were around 120 million mobile subscribers for a penetration of close to 70%; Five mobile operators were competing vigorously for a share of the subscriber base and the revenue, each claiming a healthy share of the market; In a major disappointment for the local industry, Pakistan’s proposed auction for 3G licences continued to be delayed; Pakistan’s broadband internet penetration still remained low in relative terms (only around 1% coming into 2012), there has been a significant surge in broadband services; The growth in wireless-based broadband has been especially important, representing around half the subscriptions into 2012; Growth in the country’s fixed-line market remained sluggish; fixed teledensity stand at less than 4% into 2011 with the numbers actually falling; One positive factor in the fixed market has been the success of wireless local loop technology which was supporting half of all fixed subscribers and still growing. Pakistan: - Key telecom subscribers – 2011 - 2012 Category 2011 2012 (e) Fixed-line services: Total number of subscribers 5.7 million 5.6 million Broadband: Total number of subscribers 1.8 million 2.5 million Mobile services: Total number of subscribers 113 million 125 million (Source: BuddeComm) This report provides a comprehensive overview of the trends and developments in the telecommunications market in Pakistan. Subjects covered include: Key Statistics; Market and Industry Overviews; Regulatory Environment and Development; Major Telecom Players (fixed and mobile); Infrastructure; Mobile Voice and Data Market; Internet, including VoIP; Broadband (fixed, wireless, mobile); Scenario Forecasts (fixed-line, mobile and broadband subscribers). Peter Evans September 2012 Data in this report is the latest available at the time of preparation and may not be for the current year.