Pakistan ICT and Internet Economy Report (Part 03/09)

New Technologies and Challenges for the Market

Being one of the fastest growing sectors of Pakistan, the telecom industry has proved its importance over the years. Currently, there are five giant mobile companies working under the umbrella of the mobile telecom industry of Pakistan which are Mobilink, Ufone, Warid, Telenor and Zong. The growth in the number of users of these services has increased remarkably in the past few years. PTCL, being the major fixed line provider, is still leading the industry. Not only has it been leading from the front as a giant player of the industry, but it has also acquired the services of the two most popular cellular networks Ufone and Warid. Both of these companies own the most extensive customer database in the country and they provide their customers with well recognized quality services.

According to the annual report of the Pakistani Telecommunication Authority, the total revenue of the telecom industry was amounted to 440.2 billion Rupees (4.1 billion USD) in the financial year of 2013 against the investment of 472 million USD.

The telecom industry of Pakistan being a prominent contributor to the country's economy plays a vital role in the socio-economic scenario. However, there are some significant challenges that can be observed over time which hinder the progress of this particular industry. Although there is the added advantage of having a large quantity of existing user data, companies in the telecom industry are still challenged by random taxes, regulations, fragile economic development and fierce economic competition. In the past few years, the country has experienced many unstable moments due to continuous acts of terrorism ignited by people who didn’t have the best of interest for the country, leading to a temporary decrease in foreign investments.

In moments of possible terrorist or similar attacks, telecommunication services are suspended for the time being. Public authorities argue that these steps are taken for the security of the citizens but on the other side, the telecom industry suffers a lot from these suspended services. The loss that occurs in those hours is innumerable and leads to significant decline in the progress of the industry. Thus, current economic and political conditions can be major drawbacks for the development of the telecom sector in Pakistan.

Another major problem that is affecting the telecommunication sector is grey trafficking. Many illegal and fake telephone exchanges are being used in order to make international calls, which is certainly a reason for concern for public authorities. These authorities fail to track the record of such calls which are exchanged through illegal media. A loss of $1 billion USD was recorded in 2014 due to the rise of grey trafficking in the country.

On the other side, through the initiation of 3G services in Pakistan, there was the possibility of the industry getting back in the game very quickly. The usage of 3G has increased over the past few years and the number of 3G service users is growing with each passing day as people are becoming prone to technology. Pakistan Telecommunication Authority is taking several measures to ensure that 3G technologies reach every corner of the country to increase connectivity.

A trend of consolidation among mobile operator companies is also on the rise which could prove to be very fruitful for the industry. These consolidations are being made on the motive of deploying the latest technology, including 3G and also 4G services, for the advancement of the telecom sector and ease of customers. As a result of which, large companies with strong financial positions and stability will take weaker companies under their umbrella to work in coordination for further improvement of the telecommunication sector.

Coming next: Pakistan going Mobile

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