Telecommunications in Pakistan – The unfolding revolution

For a country beset by recent natural disasters, political instability and a host of other economic and social problems, telecommunications in Pakistan has witnessed substantial growth over the past few years despite the odds. In an interview with BusinessWeek, a senior IT Minister has described the growth in Pakistan’s telecommunication industry as "an absolute revolution". Deregulation, which had its humble beginnings in 2003, has led to privatization of Pakistan’s telecom industry and can be singled out as the factor that has driven growth in this critical sector of the country’s economy.

In mid 2005, Pakistan government sold its 26% stake in the country’s top, fixed-line institution – Pakistan Telecommunication Company Limited (PTCL) to the Emirates Telecommunications Corporation (Etisalat) to further strengthen the deregulation process. Such economic reforms are driving the telecom industry to new heights. Since 2003, the Pakistan Telecommunication Authority (PTA) has awarded in excess of 200 mobile, fixed and long distance licenses to 50 companies. This has resulted in substantial increase in competition spanning a wide spectrum of telecom services and fuelled further by Etisalat’s controlling share of PTCL.

Telecom Industry watchers affirm that a major part of growth will be witnessed in mobile telephony. According to 2006 statistics, teledensity across the country jumped from a mere 6.3% to over 23.7% over the precious year and is predicted to reach 30% by the years 2009-2010. This would signify an additional 30 million fixed and mobile telephone lines. In a population of 162.4 million (as of 2006), Pakistan had 5.37 million fixed telephone lines.However, within a year, mobile subscriptions surged to over 19.6 million, making this, as telecom experts assert, one of the most rapidly expanding mobile phone markets in the world. Ufone, a subsidiary of PAK Telecom Mobile Limited (PTML) in turn, wholly owned by PTCL, surpassed the 5 million subscriber mark in 2006 while GSM newcomer Warid Telecom attracted 3 million mobile telephone customers in the same year.

It’s true that major players and the highly competitive trends in Pakistan’s Telecommunication sector are driving growth. However, a major factor that is also contributing to revenue and growth in this sector, can also be attributed to the large Pakistani expatriate communities across the Middle East together with the Diaspora of millions of non-resident Pakistanis in Western countries, particularly the US and UK. The latter segment of users, account for a phenomenal number of international telephone calls that translate into millions of dollars in terms of value.

According to government officials and telecom industry analysts, the main beneficiaries of the revolution that is being witnessed by the Pakistan telecommunication industry are the consumers and businesses. As competition grows, all leading telecom players have reduced tariffs and are substantially improving service quality. This, in turn, is giving the Pakistan economy a much needed boost. As Pakistan comprises of large cities and towns as well as thousands of little villages spread over virtually inaccessible terrain, the government is now lending its full support to all major telecom companies to increase reach and penetration of telecommunication services throughout the country. This, may not be an easy task, however, in view of the dramatic growth of Pakistan’s telecommunication industry, this dream of nationwide connectivity is not impossible. Until then, the revolution in this critical sector of Pakistan’s economy moves confidently ahead.