TELECOMMUNICATION INDUSTRY OF PAKISTAN

The ever increasing mobile telecommunications, telephone and internet markets in Pakistan
combine to form the telecommunications industry of Pakistan.

In 2008 Pakistan was the worlds third fastest growing telecommunications market. Pakistan's
telecom infrastructure is improving dramatically with foreign and domestic investments into fixed-line
and mobile networks; fiber systems are being constructed throughout the country to aid in network
growth.[1]

The telecom sector continued to grow on a steady pace during FY2012-13 with
telecom services covering 92% of the land area and 75% of the population.
Cellular mobile, local loop and broadband services continue to grow while mobile
banking is also growing at a steady pace. [14]
Regulatory environment
The Telecommunications Ordinance of 1994 created the Pakistan Telecommunication
Authority (PTA), Pakistan's first independent telecommunications regulator, and the Pakistan
Telecommunication Company Ltd (PTCL), a state-owned monopoly.[2]
Due to a lack of competition, local telephone call rates were high and international call rates were
even higher. During the 1990s, a call toUnited States cost $5 per minute (300PkRs per minute),
which was not affordable for most of the population. In addition customer servicewas poor; fixing a
problem might take 10 to 15 days. Despite this, consumers had to stick with PTCL, as they had no
other options.
This prompted the government to take a series of actions to improve the service by opening the
telecommunications market.[3] This was critical, but required a fine balance because opening the
market and preserving PTCL were both important for the government.
In July 2003 the government introduced a Deregulation Policy for the Telecommunication
Sector,[4] which allowed and encouraged foreign companies to invest in the Pakistani
telecommunications

market.[2] The centerpiece of the deregulation was the establishment of two

categories of basic services licenses: Local loop (LL), for fixed line telecommunication within the 14
PTCL regions, and Long-distance and International (LDI), for connectivity between regions. Two
sets of criteria set by the regulatory authorities must be met before an operator is allowed to start
operation: one for the issuance of a license and another for the maintenance of service quality.
In 2006, Etisalat International Pakistan, a wholly owned subsidiary of Emirates Telecommunications
Corporation, purchased a 26% stake in PTCL and assumed management control of the company.[5]

PTA has been actively involved in curbing the menace of unauthorized SIMs i.e. SIMs which
are registered on credentials of subscribers without their knowledge/consent due to identity theft
issues. In this connection, modalities have been finalized among relevant stakeholders for
deployment of biometric verification mechanism at sale channels of mobile operators which has
been initated by August 2014. [14]
Instaphone and Paktel were the pioneers in mobile communication in Pakistan during the 1990s.
They were joined by Mobilink in 1998 which was owned by Motorola until its sale to
ORASCOM.[6] The trio offered AMPS services before switching to GSM in the early
2000s. Ufone joined the mix in 2001. The sector was highly regulated which led to high call
rates and poor service quality.[9]
In January 2004 the Ministry of Information Technology issued its Mobile Cellular Policy with
objectives to:[10]
1. Promote efficient use of radio spectrum;
2. Increase choice for customers of cellular mobile services at competitive and affordable
prices;
3. Encourage private investment in the cellular mobile sector;
4. Recognize the rights and obligations of mobile cellular operators;
5. Provide for fair competition among mobile and fixed line operators; and
6. Provide an effective and well defined regulatory regime that is consistent with
international best practices.
The deregulation bore fruit as international companies Telenor (Norway) and Warid Pakistan set
up operations in the country in 2005.
Subscriber base
The mobile telecommunications sector is seeing very large year-to-year growth in Pakistan.
Approximately 90 percent of Pakistanis live within areas that have cell phone coverage and more
than half of all Pakistanis have access to a cell phone.[6] With 118 million mobile subscribers in
March 2012, Pakistan has the highest mobile penetration rate in the South Asian region.[11]
According to the Pakistan Telecommunication Authority (PTA), Mobilink continues to lead the
market with 35.7 million subscribers, followed by Telenor with 29.3 million, Ufone with 23.1
million, Zong with 15.6 million, and Warid Telecom with 14.3 million.[11] All telecom
companies are working to broaden their networks in the Azad Jammu and Kashmir and Northern
Areas, which were largely ignored until recently. Five of the seven Agencies of the tribal
areas have mobile coverage.[12]
SMS

Pakistanis collectively sent over 151 billion text messages during the year 2009. Nokia has cited
Pakistan to be producing the third highest SMS traffic in the world in 2010.[13]
Telecom economy witnessed some growth in the fiscal year 2012-13 with major indicators
showing improvement from last year. Teledensity of the country reached 75.21% (135 million
subscribers combining Cellular, WLL & LL) with major contribution from cellular sector and
revenues of Rs. 445.7 billion. Telecom sector contributed Rs. 124 billion to the national
exchequer while the investment reached US $472 million in the FY2012-13. However, FDI
remained on the negative side of the scale while the telecom imports reached at US $918 million
in the current fiscal year. [14]
Mobile penetration has reached to 71.7% with 128.93 million subscribers at the end of June
2013. CMOs together added 8.1 million new subscribers to their networks. Cellular operators
cover 92% of the land area via 35,889 cell sites across Pakistan. [14]

Local loop sector has performed well as the total teledensity of both FLL and WLL services
combined reached 3.6% at the end of FY 2012-13. WLL segment has grown considerably over
the past year while FLL subscribers have also risen slightly. Currently, there are 6.38 million
subscribers of both FLL and WLL combined, at the end of June, 2013 as compared to 5.87
million at the end of same period last year. PTCL has more than 95% share in the FLL subscriber
base while in the WLL sector, it holds close to 37% of the market share. Broadband sector also
showed reasonable growth with 2.72 million subscribers and 30% growth during the FY2012-13.
The penetration level remains low at 1.52%. [14]

Cellular mobile companies have actively engaged in joint ventures with commercial banks for
the provision of financial services in Pakistan. PTA has been actively working on the promotion
of mobile banking and has collaborated with State Bank of Pakistan to constitute the 'Technical
Implementation of Mobile Banking Regulations. Unprecedented growth has been witnessed in
M-banking indicators such as M-banking agents registered a growth of 141.6 percent, increasing
from 26,792 to 64, 716, and the growth in m-wallet accounts was 126.4 percent, increasing from
1.4 million to 2.4 million. M-banking segment of Pakistan has vast potential for growth in the
coming years if the operators and the two regulators (PTA & SBP) keep moving in the right
direction. [14]

TELEDENSITY
Teledensity of Pakistan stood at 75.2% at the end of FY2012-13 as compared to 71.73% in the
FY2011-12 depicting growth of almost four percentage points over the previous year. The main
contributor to the teledensity figure is cellular mobile sector covering 71.7% of the population.
Fixed and Wireless Local Loop services constitute the rest of the figure with 1.6% and 1.9%

shares respectively. [14]

TELEDENSITY

Source: http:// http://www.pta.gov.pk/

Telecom Revenues
The telecom revenues have reached an all time high of Rs. 440.20 billion in the FY 2012-13 with
a growth of 7.0% achieved over the last fiscal year. The increasing revenues from the telecom
sector indicate the strength and size of the market despite the economic difficulties and tough
competition, especially in the cellular sector. [14]

TELECOM REVENUES (Rs. IN BILLIONS)

Source: http:// http://www.pta.gov.pk/

Telecom Contribution to National Exchequer

Telecom sector is one of the highest contributors to the National Exchequer, putting Rs. 119
billion per year in the National Kitty on average for the last five years. The fiscal year 2012-13
has seen slightly lesser contribution to the National Exchequer from telecom sector i.e. Rs. 124
billion as compared to Rs. 133.41 billion deposited by telecom sector in FY2011-13. General
Sales Tax (GST) forms the major part of the contribution with Rs. 57.78 billion collected by
FBR from telecom sector. A huge sum of Rs. 53.52 billion has been paid by the telecom
operators under various heads such as duties, withholding tax, fees etc. PTA has also received
Rs. 6.8 billion from the operators under various regulatory heads and deposited into the National
Exchequer till March, 2013 while Rs. 7.52 billion was collected under the Activation Tax head.
[14]

REFERENCES
1. Joseph Wilson (22 January 2009). "Telecom Regulatory and Policy Environment in Pakistan:
Results and Analysis of the 2008 TRE Survey". LIRNEasia.
2. "Telecommunication Laws in Pakistan", Bilal Sarwari, Pakistan Law website, 24 October 2009
3. "Pakistan: Birth Of A Telecom Revolution", Bloomberg Businessweek, 31 January 2005
4. De-Regulation Policy for the Telecommunication Sector, Ministry of Information Technology,
Government of Pakistan, July 2003
5. "Etisalat to pay $800m for PTCL stake: Waqar", Reuters, The Nation, 28 January 2010
6. "Pakistan Country Report", The World Factbook, Central Intelligence Agency, United States, 14
June 2011
9. Paktel services offered
10. Mobile Cellular Policy, Ministry of Information Technology, 28 January 2004

11. "Telecom Indicators", Pakistan Telecommunication Authority, (Wednesday, 9 May 2012)

12. "Celluar company launches service in S Waziristan", Daily Times, Lahore, Pakistan, 24

March 2009
13. "Tech Society: Generation Text", Yasmin Malik, The Express Tribune, 15 November
2011
14. Annual Report 2012-13, Pakistan Telecommunication Authority
15.