Telecom Industry of Pakistan

Technical and Business Writing Report:
Telecom Industry of Pakistan Present and Future Trends

By:
Haisum Bhatti (0812155)

BS Software Engineering 2 To:
Miss. IqraZafar
(Course Instructor-TBW, SZABIST-Karachi)
13th May, 2009.
Telecom Industry of Pakistan Present and Future Trends Technical and Business Writing Report by Haisum Bhatti http://haisum.info
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Acknowledgement
All the admirations are for the Allah Who created us and gave us wisdom to accomplish the tasks that none of other creatures can, and Who gave us opportunity to get the education to understand his nature more clearly. I would like to commend Miss IqraZafar for her eternal efforts to teach us technical and business writing. I would also like to laud my friend Muhammad Ahmed for developing and designing title flier for this report and SyedAbidHasan for reviewing the document for formatting. Last but not the least I would like to thank my dear parents; specially my father MussawirBhatti for his faith and believe in me, which gives me confidence and courage to defeat any challenge in my life.
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Table of Contents
Abstract ........................................................................................................................... 6 1. Introduction .................................................................................................................. 7 1.1. Background ........................................................................................................... 7 1.2. Problem Statements .............................................................................................. 8 1.3. Research Objectives ............................................................................................. 8 1.4. Benefits of the Study ............................................................................................. 9 2. Scope of Study .......................................................................................................... 10 2.1. Geographic Scope ........................................................................................... 10 2.2. Technological Scope ........................................................................................ 10 2.2.1. 2.2.2. Scope based on Data Collection ................................................................ 10 Scope of Time ............................................................................................ 11
3. Research Methodology .............................................................................................. 11 3.1. Qualitative Methodology ...................................................................................... 11 3.2. Sampling Method ................................................................................................ 11 3.3. Data Analysis Techniques ................................................................................... 12 4. Research Limitations ................................................................................................. 12 5. Telecom in Pakistan A Brief Overview .................................................................... 12 6. Telecom Industry of Pakistan Past Trends ............................................................. 13 6.1. Brief History ......................................................................................................... 13 6.2. Might is Right....................................................................................................... 16
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7. Telecom Industry of Pakistan Present Trends ........................................................ 16 8. Sectors of Telecom in Pakistan ................................................................................. 16 8.2. Fixed / Land line ............................................................................................... 21 8.2.1. PTCL .......................................................................................................... 21
8.3. Fixed Wireless (WLL) .......................................................................................... 23 8.4. WiMAX ................................................................................................................ 23 8.5. Voice Over IP ...................................................................................................... 23 8.6. Internet Sector ..................................................................................................... 24 8.6.1. 8.6.2. 8.6.3. Cable net and Dial up ................................................................................ 24 Broadband and DSL .................................................................................. 24 Wireless Connections ................................................................................ 25
9. Effects of Telecom ..................................................................................................... 26 9.1. Economic Effects................................................................................................. 26 9.2. Employment ........................................................................................................ 28 9.3. Some Bad Impacts .............................................................................................. 29 10. Expected Future Trends .......................................................................................... 30 11. Conclusion ............................................................................................................... 30 12. References .............................................................................................................. 36 Glossary ........................................................................................................................ 39 Appendix........................................................................................................................ 31
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Table of Figures
Figure 1-Pakistan Telecom in Numbers......................................................................... 17 Figure 2 - Market Share of Mobile Companies .............................................................. 17 Figure 3 - Different Mobile Companies .......................................................................... 18 Figure 4- PTCL One Stop Shop..................................................................................... 21 Figure 5 - Internet Statistics ........................................................................................... 26 Figure 6 - Imports of Telecom........................................................................................ 32 Figure 7 - Investment by Cellular Companies ................................................................ 33
Table of Tables
Table 1- The basic statistics as in December 1998 (Bakai, 1999) ................................. 14 Table 2 - Number of Mobile Subscribers ....................................................................... 17 Table 3 - Cellular Subscribers and Growth Rate ........................................................... 20 Table 4 - Telecom Sector share in GDP (%) ................................................................. 26 Table 5 - GST/CED Collection from Telecom Sector (Rs. in billions) ............................ 27 Table 6 - Foreign Direct Investment in Telecom Sector ................................................. 27
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Abstract
Telecom industry, collection of all the industries and companies providing phone service, data or entertainment to consumers and businesses, is the fastest growing industry in Pakistan. As recently as 1994, trained basically in voice telecomm technologies , a Divisional Engineer at a PTCL city exchange could not believe that data could also be sent over a telephone line via some means! In 2003, the government de-regulated Telecom policy of PTA (See Appendix). This deregulation of policy allowed access for local and international companies to invest in telecom industry more flexibly than ever. New companies came into market and due to high competition rates went cheaper and cheaper, hence making telecom-oriented services affordable to many. This resulted rapid growth of telecom. New services are expected to get launched in future. These new services would keep Telecom in its hay-day at least for next 6-7 years. Therefore for any organization or individual, intending to invest or any student, intending to choose this sector as career, this is the juicy field.
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1. Introduction
1.1. Background
Telecom industry, collection of all the industries and companies providing phone service, data or entertainment to consumers and businesses, is the fastest growing industry in Pakistan today with highest per year growth rate in tele-density worldwide (Atta 2008b, P.1 of 1). Due to high growth rate this industry has become back-bone of Pakistans economy. It is providing many employment and investment opportunities due to high revenues generated via huge number of users of telecom sector. Along with opportunities, this industry also provides vast facilities to communicate and connect globally in better, reliable and modern manner. Today IT sector of Pakistan can be considered as most developed industrial sector of Pakistan. According to Atta(2008a), this industry is expected to grow by 50% in next 3 years and growth rate might increase in future due to introduction of 3G technology in cellular services and new internet service providing methods like DSL, Broadband and Wi-Max throughout the country. As much as 1 million new customers are added to number of cellular subscribers which stood at 91,442,341 by March 2009 (Afzal 2009, P.1. of 1).
2 1
1 2
The number of operational telephone lines as a percentage of population 3rd Generation (refer Glossary)
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More than 2% of the share of GDP of Pakistan is generated from telecom, this industry holds more than US$ US$ 1,438 million of foreign direct investment making 27% of total foreign investment, which is more than any other industry including banking and manufacturing in Pakistan (Pakistan Telecommunications Authority 2007, P.2.). This report concerns on the present and future trends in this incredibly growing Telecom Industry of Pakistan. This will help many individuals as well as organizations related with field of IT to understand the depth and density of this industry and will encourage men-power in this high revenue oriented field.
1.2. Problem Statements

This report will try to focus on various aspects of Telecom industry in Pakistan, in order to accomplish desired tasks this reports theme would be based on finding answers to some problem statements. These problem statements would be:
y y y y y y y
What was the past of telecom industry and its trends in Pakistan? What are the current trends of Telecom industry of Pakistan? How telecom industry is affecting economy of Pakistan? How telecom industry is helping to improve living standards of local people? How it is facilitating business and other industries? Where does Pakistan stand in global facts and figures regarding telecom industry? Keeping track of current facts and figures, what might be the future of telecom industry
in Pakistan? Depending on the time and scope of study, I might add/alter some of the problem statements within the scope of research.
1.3. Research Objectives

Everything and every act have objectives so has this report, regarding telecom industry
and its present and future trends. The main objectives of this report are:
y y y y
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To determine past trends of telecom industry of Pakistan. To determine current trends of telecom industries of Pakistan. To illustrate the ways in which telecom industry is affecting economy of Pakistan. To demonstrate role of telecom industry in improving living standards of people of Pakistan. To point out the facilities provided via telecom to business and other industries. To analyze facts and figures of telecom industry of Pakistan with global standings. To predict future of telecom industry of Pakistan.
y y y
1.4. Benefits of the Study

Study is quite beneficial in many aspects. First of all it provides an insight of the only modern industry that Pakistan can feel proud about. Secondly it illustrates all the facts and figures necessary to demonstrate market of Pakistan in this sector which would encourage foreign and local investment in this field, new people would get involved in the business hence improving the standards of current market and industry. Thirdly, in students perspective, it encourages new students to explore and become part of telecom and IT industry of Pakistan. This will improve men-power and implementation of modern knowledge in this field. Furthermore this report also predicts the future of telecom sector in country by analyzing present and past trends, which would help investors and researchers to conduct their respective tasks in more specific manner rather than loitering here and there. In short, this report illustrates past, present and future trends of Pakistans telecom industry which would help in evolving does and donts of this industry.
Telecom Industry of Pakistan Present and Future Trends Technical and Business Writing Report by Haisum Bhatti http://haisum.info 2. Scope of Study
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The scope of this study needs to be defined in different scenarios which are as under:
2.1. Geographic Scope

Geographically this report is limited to Pakistan only because the main task of this report is to analyze and illustrate telecom industrys trends in Pakistan. More focus would be given to trends in urban areas due to easy access. However trends in rural areas would not be neglected completely and would be analyzed where necessary and possible.
2.2. Technological Scope

Telecom is a vast industry it includes many sub-fields like cellular services, internet access, radio, television and data access etc. Due to time constrain each of these sub topics cant be covered. Therefore main focus of this report will revolve around cellular and internetservices.
2.2.1. Scope based on Data Collection

Being quantitative in nature this report will revolve around secondary data collection from authentic sources like PTAs official website and other press releases about telecom. Although primary data must be included in the report to make it complete but due to time and access constrains it is not possible to include primary data in the report. However efforts would be conducted, where possible and applicable to include primary data. Data collection would be done for: y Past trends in telecom industry of Pakistan
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y y Current trends in telecom industry of Pakistan
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Facts and figures regarding usage of cellular and internet services throughout country
y y
International standings of Pakistan in telecom industry Facts that might be used to predict future of telecom industry in Pakistan
2.2.2. Scope of Time

Since telecom is not new in Pakistan, it has just spread rapidly throughout country; therefore the scope of time regarding this report is not broad. This report has a scope of time, with respect to available data, from year 1991 to 2009. Future trends would be predicted for next six years i.e. till 2015.
3. Research Methodology
Research is qualitative in nature and focuses on collecting data from authentic and authorized secondary resources as websites, magazines, reports and articles from newspapers.
3.1. Qualitative Methodology

Since research is purely qualitative in nature hence qualitative methodology and the sampling methods need to be very clearly defined in order to meet the research objectives highlighted.
3.2. Sampling Method

The sampling would be done by secondary resources which would include the past and present journals published covering these aspects, newspapers, government notifications on federal ministry websites, economic surveys conducted by ministry of
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finance, industrial surveys, Surveys conducted by PTA, Reports regarding telecom sector, discussions held on online Pakistani telecommunication forums like those on www.propakistani.com and other relevant sources.
3.3. Data Analysis Techniques

Data would be analyzed by comparing the figures acquired for past with those acquired from recent researches and reports. This would evaluate the trends between past and present and would help in evaluating results for future trends of telecom in Pakistan.
4. Research Limitations
Within the valid scope of the research, following are the limitations of the research:
y
The data collected for this report is narrow in accordance with this broad topic, due to lack of time and resources. Research would be limited to Cellular services and Internet access, data for sectors like radio, TV and data services are neglected due to constrain of time and scope. Attention and focus would be furnished to urban areas in accordance with geographical scope. The research is only limited to the data collection from internet, newspaper, reports etc. Data collection in a short time constraint. This report is based on my conception what I think about it if there is any error than kindly forgive me because thinking may vary from person to person.
y y
5. Telecom in Pakistan A Brief Overview

According to Saeed (2003) Telecom industry is booming in Pakistan, with new companies getting licensed, the competition is tough as a result the consumer is getting
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benefit and enjoying cheap call rates and internet access. In the country of a population of more than 16 million, telecom is one of the best revenue generating industry. As voice over IP, web conferencing and online video sessions are becoming popular and industry is growing at a rapid rate these companies have bright future ahead. These companies and their investment in local market of Pakistan are providing an enormous, economic, social and financial support to Pakistans people and government. The popular companies providing telecom services in Pakistan are Mobilink, Ufone, Telenor, Zong, Cybernet, Orascom and PTCL etc. Each of these companies would be further discussed in their respective sections.
6. Telecom Industry of Pakistan Past Trends 6.1. Brief History

As told by Saeed (2003) story started in 1947 when Pakistans Telecom sector inherited
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the British Post, Telegraph & Telephone departments with a miniscule base of 7000 telephone lines used by British rulers during their stay. For 30 years this entity remained with its old mechanical, analog Strouger switches and analog telephone lines. By 1962 this PTT Department was split up into the Telephone & Telegraph Department and the
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Postal Departments. By 1991 this was further re-organized thorough the PTC Act 1991 opening this public sector to the private sector companies. Licenses were granted for non-basic services where the PTT had no experience at all. These were Data Network Services, Paging, and Manufacturing of Small Telephone Exchanges. Mobilink, the first cellular services providing company was also established during this era. Once the Internet exploded onto the Global Telecom scenario, it was evident that the
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Service provided by Post office, similar to telephone (see glossary) Pakistan telecommunication company (see Appendix)
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old Pakistan Telecom monopoly was no longer able to compete with new revolutionary technologies. As recently as 1994, trained basically in voice telecomm technologies , a Divisional Engineer at a PTCL city exchange could not believe that data could also be sent over a telephone line via some means! In 2003, the government de-regulated Telecom policy of PTA (See Appendix). This deregulation of policy allowed access for local and international companies to invest in telecom industry more flexibly than ever. New companies were licensed which increased competition and the rates of services drastically came down. Due to cheap rates telecom became affordable to common men, and hence growing rapidly became the trend of present for Pakistan.
Table 1- The basic statistics as in December 1998 (Bakai, 1999)
Infrastructure
Dec. 98
March 2003
Network Capacity [ ALI]
3.52 (M)
4.4 Million
Telephones in service [ ALIs]
2.82(M)
3.69 Million
Total Population
130 million
145 million 2.542.73 %
Teledensity June 1998
2.20 %
Pending demand
NA
244,000
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Network Digitalization June 1998 Fiber Optic cable length 3902 km 6204 km. No. of exchanges installed in 1997-98 Total exchanges 2577 2700 42 78.27% 100%
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New NWD Stations added (1997-98) Total NWD Stations No. of NWD Calls (During 97-98 Jjuly - Dec) No. of NWD Units (during 97-98) New Telegraph Offices opened (1997-98) PCOs & Payphones Rural Urban
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1076 525.48 (M) 3540.630 (M) 1
1781
346 total.
10,787 6,762 12,500
105,000
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Telecom Industry of Pakistan Present and Future Trends Technical and Business Writing Report by Haisum Bhatti http://haisum.info 6.2. Might is Right
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Might is right was reflected in the PTCs (see Appendix) decisions, to not allow anyone to even attach a Fax machine or a small Telephone Exchange to a telephone line in 1980 (Saeed 2003, P.2 of 2). Such products required "Licenses" and hence generating revenue because of no competitive in market at all. Mobilink, being the only cellular service, also robbed the customers with its high rates of up to Rs.25-50 / minute, local calls. The rates varied according to the distances.
7. Telecom Industry of Pakistan Present Trends

With the Gods grace and the Musharraf-Governments5 policies rule of jungle from Pakistans local market has vanished. New competitors have arrived against PTCL and Mobilink.These include Ufone, Telenor, Zong, Warid, Wateen, WorldCall, and GoCDMA etc. High competition has reduced the service rates, making them accessible to local people, causing rapid growth of industry. New investors are investing their investment in this field. Taxes generated through this industry play a vital role in economic development. Further details about present trends are discussed in heading 8 - 11.
8. Sectors of Telecom in Pakistan

Telecom industry of Pakistan has several sectors including cellular, internet, fixed/wireless LAN/DSL/Broadband, Wi-Max, VoiP. Each of these sectors is discussed below:
Government lead by General Parvaiz Musharraf and PML-Q from October 1999 February 2008
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Telecom Industry of Pakistan Present and Future Trends Technical and Business Writing Report by Haisum Bhatti http://haisum.info 8.1. Cellular Sector
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According to PTA (2008) the Pakistan cellular market had reached the mark of 90 million subscribers in September 2008, almost double from 2006 numbers. The growth slowed after thatand at the end of November 2008 the total mobile subscribers were 90.5 million. The year 2008 was also marked by changes in SIM sales and
Figure 1-Pakistan Telecom in Numbers
registration process, enforced by PTA, the government regulator. Following graph shows the market share of cellular companies of Pakistan.
Figure 2 - Market Share of Mobile Companies
Table 2 - Number of Mobile Subscribers
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Now lets review some recent history,at the end of year 2006 the total subscribers were 48.2 million. In June 2007 the total mobile users had reached over 63 million. Based on numbers published at PTA website for 2007, the total number of subscribers (technically it is the number of SIMs issued) was 76.6 million, a teledensity of about 49%. In 2007 the average growth rate was almost2.5 millionnew subscribers each month! After second half of 2007 it seemed as if the growth had slowed downa little bit but overall it was fine. One remarkable achievement was by Zong (formerly Paktel) which launched very successful
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Figure 3 - Different Mobile Companies
campaigns towards 2007s end.See following chartfor a breakdown of market share by mobile companies at the end of first quarter of 2007. Heres a brief description of all the mobile companies in Pakistan (based on data from NTCPK (2004)): At the top is Mobilink, the Pakistani unit of Egypt-based
CompanyOrascom. Company has been operating in Pakistan since 1994. Subscriber share is almost 35% at the end of Sep 2008. Ufone, a wholly owned subsidiary of PTCL, is now under the control of Etisalat group of UAE. It has about 21% of subscriber share and added the most lines (2.4 million) from 2006-07.
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Warid, owned by the Abu Dhabi group of the United Arab Emirates and sister of Wateen group is number 4 in competetionwith 18% market of subscribers. Recently it sold 30% share to SingTel. Norways Telenor, entered in 2004 with about a billion US dollar investment in Pakistan has been doing well, based on its recent earning report. It shares 20% of the market share. Telenors stock is listed in the Oslo stock market (TEL) and in US (TELNY).
Zong, formerly Paktel, was the latest target of foreign investment. After it
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got acquired by China Mobile it was rebranded as Zong and launched one of the most successful and productive campaigns. Within a matter of few months, Zong has achieved a 6% of market share. The table shows number of cellular subscribers from 2000 to March 2009.
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Table 3 - Cellular Subscribers and Growth Rate
2009
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Telecom Industry of Pakistan Present and Future Trends Technical and Business Writing Report by Haisum Bhatti http://haisum.info 8.2. Fixed / Land line
8.2.1. PTCL
Pakistan Telecommunication Company Limited (PTCL) is one of the largest telecommunication companies in Pakistan. This company provides telephony services to the
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nation and has the status of backbone for country's telecommunication infrastructure despite arrival of a dozen other competent including telecom giants like Telenor and China Mobile. According to Wikipedia (2009) The Company consists of around 2500 telephone exchanges across country providing largest fixed line network. GSM, CDMA and Internet are other services of PTCL, making it a gigantic organization. The Government of Pakistan sold 26% shares and control of the company to Etisalat, a UAE company in 2006. The Government of Pakistan retained 62% of the shares while the remaining 12% are held by the general public of Pakistan. In middle of 2005 Government of Pakistan had decided to sell at least 26% of this company to some private agency (Wikipedia 2009). There were three participants in the quest for privatization of PTCL. Etisalat, a Dubai based telecom company was able to get the shares with a large margin in the bet. When Government the was going there to was even
privatize PTCL
company
country wide protest and strike by workers. Protestors disrupted Phone lines of some big Government institutions like Punjab University Lahore and many lines of public
Figure 4- PTCL One Stop Shop
sector
were
also
blocked.
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Military took over the management of all the Exchanges in the country. They arrested many workers and put them in prison. The conflict between Government and employees ended with a 30% increase in the salaries of workers. There have been diverse changes in the company due to privatization. Such examples include the VSS (Voluntary Separation Scheme for its employees), Enterprise resource planning (SAP based), restructuring and B& CC (Billing and Customer Care Software) etc (Wikipedia, 2009). Another minor change was change of brand identity (logo) that presents PTCL's new face after privatization, with greater focus on customer satisfaction and bringing about of new advancements in telecom for Pakistani consumers. 8.2.1.1. Historical Background These are some historical milestones for PTCL (Wikipedia 2009): 1. 1947 Posts & Telegraph Dept established 2. 1961 Pakistan Telegraph & Telephone Deptt. 3. 1990-91 Pakistan Telecom Corporation 4. 1995 About 5% of PTC assets transferred to PTA, FAB & NTC. 5. 1996 PTCL Formed listed on all Stock Exchanges of Pakistan. 6. 1998 Mobile (Ufone) & Internet (PakNet)subsidiaries established. 7. 2000 Telecom Policy Finalized 8. 2003 Telecom Deregulation Policy Announced 9. 2006 Etisalat Takes Over PTCL's management
8.2.2. The National Telecommunication Corporation

The National Telecommunication Corporation (NTC) is another telecommunication network operator established by the Government of Pakistan. It has inherited 5 percent
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of the assets and infrastructure of the PTC, including a nation-wide microwave trunk backbone (Callpakistandirect.com, 2009). NTC has the mandate to provide domestic telecommunication services to the armed forces, defense projects, federal government, provincial governments and other government agencies and institutions. However, it is not allowed to sell its capacity on the telecommunication system to any entity other than government agencies or the PTCL. For international calls, NTC users have to use PTCL facilities.
8.3. Fixed
Wireless
(WLL)
Wireless local loop services are based on CDMA and are considered an alternative to copper lines. Recently rebranded Vfone service by PTCL is the market leader and there have been many intersting marketing and pricing moves (Bhatti 2007, P.1. of 1).
8.4. WiMAX
WiMAX is service that provides wireless internet access. This service is still new and is in terms of development in Pakistan. Wateen has emerged as the largest player and has startedWiMAX services since December, 2007. Mobilink Infinityhas also started commercial WiMAX service in Karachi and other cities.The second best player, World Call had started its work in early 2008s and now has a broad network in major cities of country. Ufone has also started its homework on Wi-Fi. Wi-tribe, cybernet and WOL are other players in this sector.
8.5. Voice Over IP

VoIP (Voice over IP), in other words: an International call, local rates, is new telecom sector in Pakistan. Companies providing VOIP and call forwarding services are (telecompk.net 2009, P.1.): Vonics BRAIN TEL
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CallPakistanDirect Rebetel- not specific to Pakistan FreeCallPlanet - not specific to Pakistan
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8.6. Internet Sector

Although internet is in use throughout Pakistan since 1996, but its use has widely spread in recent years. New services and companies are coming in the market every day. A reasonable investment is being put into this, especially by cellular companies and PTCL. Internet sector can be categorized into following sub-sectors according to type of internet service.
8.6.1. Cable net and Dial up

Cable net and dial up are most widely used services for accessing internet in Pakistan due to their cheap rates. Companies like CyberNet and SuperNet provide ISP hours through cards available at general shops or PCOs and other public outlets, for as low as Rs.10. PTCL also provides dial-up services for Rs.6/hour. Although dial-up service is cheap but it has very slow speed, therefore people, who can afford a faster connection, avoid using dial-up. It is rapidly vanishing from market due to other high-speed services. LAN or publicly famous term Cable net is another cheaper way to access the internet. It is widely used and provides a much better performance than dial-up. These services can be acquired for monthly charges of Rs.400-600/month.
8.6.2. Broadband and DSL

Broadband and DSL are trend of day nowadays. People wanting higher speeds and faster access prefer using Broadband and DSL services. These services are a little expensive than Dial-up and Cable-net.
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PTCL broadband service is the leading broadband service, due to cheaper rates and faster service. Link.net, Wateen and CyberNet are leading DSL service providers throughout country. The services are available in range of 128kbps-4mbps6 at a cost ranging from Rs.800-4000/month.
8.6.3. Wireless Connections

Wireless connections are of different types and categories. Their speed varies from place to place according to type of service. Most commonly available and reliable service is WiMAX, wireless connection with ability to cover larger areas wirelessly. The service is being provided by Mobilink infinity, WorldCall and Wateen. It is still in development process and is only available in large cities like Karachi, Lahore and Islamabad. Another type of wireless connection is WiFi, wireless connection only covering smaller areas like a house or small company. This service is used in small companies to enable access to internet to every computer. It is also used in universities like SZABIST, IBA and LUMS to provide inter-organizational internet access. GPRS and EDGE (See Glossary) based services are also provided at fix rate to mobile phone users to access internet on their cell phones or on PCs by connecting cell phones to them.
1 mbps= 1024 kbps
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Figure 5 - Internet Statistics
9. Effects of Telecom 9.1. Economic Effects

Telecom has a direct impact on economy of the country. It shares than 2% share of GDP. Almost 45 billion tax is collected every year from this sector. Following few tables illustrate how and how much does this sector affect Pakistans economy (PTA 2008). Table 4 - Telecom Sector share in GDP (%)
Years
%age share of GDP
2000-01 2001-02
1.6 1.6
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2002-03 2003-04 2004-05 2005-06 1.7 1.7 1.9 2.0
2009
Table 5 - GST/CED Collection from Telecom Sector(Rs. in billions)
2001-02 Mobile Basic Telephony * Others** Total 6.9 8.9 2.0
2002-03 3.3
2003-04 5.2
2004-05 9.9
2005-06 18.8
2006-07 28.2
2007-08 36.80
8.2 11.5
6.9 12.1
9.7 0.9 20.5
7.7 0.3 26.8
7.9 0.2 36.3
6.80 0.93 44.53
* PTCL and NTC only **Others include WLL/ LDI operators
Table 6 - Foreign Direct Investment in Telecom Sector

FDI in Telecom Sector 6.1 13.5 207.1 494.4 1905.1 1824.3 Contribution in Total FDI (%) 1.26 1.69 21.13 32.44 54.11 35.60
Years 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Total FDI 484.7 798 979.9 1524 3521.0 5124.9
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2007-08 5152.80 1438.60
2009
27.92
If we analyze Telecom Sector share in GDP in the chart on previous page we can clearly see that telecom sectors revenues and share in GDP are continuously growing every year. Similarly taxes acquired and foreign investment is also continuously growing. From this we can conclude that telecom has a bright future in Pakistan.
9.2. Employment
As Pakistan is experiencing a massive boom in the Telecom sector, job opportunities are also increasing at lights speed. Telecom sector has revolutionized the job sector in Pakistan and has become one of the largest job providers in Pakistan. If you log in to any job site of Pakistan such as rozee.pk, youll observe that roughly around two-thirds of job postings are related to the Telecom industry directly or indirectly. There are a lot of universities offering degrees in Telecom Engineering. The Electrical and Electronic Engineering programs have also been upgraded by the universities, thus offering modern education in Telecom related fields. Job opportunities definitely depend on the standing of the university, the quality of education and communication skills. Still, the Telecom Industry in Pakistan has gone through such enormous expansion that virtually no Engineering graduate (who is graduated in Electronics or Telecom Engineering) is jobless here. Telecom Industry in Pakistan is hiring from every university, whether its a hi-fi one (like GIKI, NUST or SZABIST), and the Sarkaari (governmental) and Private universities (recognized by HEC) and even in some cases from the Dhabaa (Worthless) universities, to meet the ever growing demands (Khan 2009, P.1 of 1). Let us discuss some salary structure with respect to fresh graduates. Mobile companies generally pay you the highest. Salaries for beginners in the Telecom industry start from 15000-35000. It definitely depends on the employers Market Position, the GPA you
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have achieved and finally from which university have you graduated. Also if you have secured good Internships in your junior years, then the chances of better employment will definitely be higher. As the Telecom sector is the fastest growing sector in the world (with new technologies developing every day), we can hope that career prospects will remain higher in this industry in years to come. So if any of our readers has yet to decide about ones future course and is interested in the Telecom industry, I would advice him/her to embrace this field with broad arms. However I think the readers of this report would be more professional and would know market more compactly than me. Any suggestions in this regard would be gladly furnished to improve this report.
9.3. Some Bad Impacts

Telecom Sector also shares some unpleasant things as well, which are (Atta 2008a, P.1 of 1):
Cellular market ruined Local Loop (Land Line) such as PTCL and WLL market Regulator (PTA) was unable to conduct Quality of Service survey, and waved for
cellular companies that have flaws in their services
20 Million illegal and un-identified SIMs are circulating in market Increment in SPAM text messaging and unwanted phone calls Network Over charging Low Average Revenue Per User (ARPU) due to competition Low ROI (Return on investment) for smaller to mid-sized telecom business
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GST collection from telecom sector is persistent for last 2 years at Rs.35 billion,
despite of millions of additional telecom users
10. Expected Future Trends

Keeping the track of briefly discussed past and present trends of Telecom sector in Pakistan we can conclude that Telecom in Pakistan is in its Hay-day. Investment, employment, career and hence everything in this field seems to be awesome in future. Investment is expected to increase, as PTA would give 3G licenses to cellular companies in few months, which would rush a large amount of customers to use this new service. Furthermore still undiscovered and unpopular services like GPS, Push-toTalk (introduced by Ufone but not wide spread) might get introduced in Future increasing tele-density. Other possibilities lay in WiMAX and other similar internet services with high speed and cheaper rates. These new services would keep Telecom in its hay-day atleast for next 6-7 years. Therefore for any organization or individual, intending to invest or any student, intending to choose this sector as career, this is the juicy field.
11. Conclusion
Telecom sector in Pakistan is booming nowadays faster than in any country on earth today. The main factors behind this growth are foreign investment and neck to neck competition among companies providing services in this sector. It is a major source of revenue for Pakistans government and generates more employment opportunities nowadays than any other industrial sector of country. Telecom has revolutionized means of business, communication, lifestyle and education in Pakistan. It is still growing rapidly.
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New investments in several services are expected in future therefore the future of this sector in Pakistan seems bright and enlightened.
Appendix
A. De-Regulation Policy for the Telecommunication Sector
In July, 2003 PTA released its new, de regulated policy which had following objectives PTA 2003, P.5.): Increase service choice for customers of telecommunication services at competitiveand affordable rates Promote infrastructure development, especially infrastructure that will
increasetele-density and the spread of telecommunication services in all market segments(including voice, data and cellular etc) Increase private investment in the telecommunication sector and encourage localtelecom manufacturing / service industry Recognizing the challenge to incumbent, minimize exposure to the
Governmentsrevenue base in the short term Accelerate expansion of telecommunication infrastructure to
extendtelecommunication services to un-served and under-served areas Liberalize the telecommunication Maintain an effective and well defined regulatory regime that is consistent withinternational best practices, and;
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Maintain consistency with Pakistans IT and Internet promotion policy of low pricesfor bandwidth to make Internet access affordable. Further details regarding PTAs deregulation policy can be found in a PDF titled DeRegulation Policy 2003, from PTAs website.
B. Pakistan Telecommunication Company

Pakistan Telecommunication Company (PTC). The Group's principal activity is to provide telecommunication services. The Group provides domestic and international services throughout Pakistan and also manufactures telecommunication related equipment. The Group also provides services to territories in Azad Jammu and Kashmir and northern areas.
C. Additional Graphs
Figure 6 - Imports of Telecom
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Figure 7 - Investment by Cellular Companies
D. Some Facts about Pakistan Telecom Industry

y
PTA successfully liberalized the telecom sector of country in an efficient, transparent and fastest deregulation of telecom in the region
The Government of Pakistan gave the status of Industry to Telecommunication Sector
With de-regulation of telecom sector, PTA awarded 14 Long Distance and International licenses, 38 fixed local loop licenses and 17 Wireless Local Loop licenses to different companies.
33
y
2009
Under the deregulation process PTA awarded two new Cellular Mobile Licenses to Warid Telecom and Telenor for US$ 291 Million through open auction, while renewed other 2 licenses for Mobilink and Paktel against same value.
In 2007 Azad Jammu and Kashmir council adopted the Pakistan Telecom Act 1996, and PTAs jurisdiction was expanded to reach AJK and Northern Areas.
PTA awarded five Cellular Licenses for AJK and NA while 13 companies were awarded total of 24 licenses for Long Distance International, Fixed Local Loop, Wireless Local Loop and Class Value added services categories.
Pakistan Telecom Authority is capable of tracking gray traffic (illegal traffic) thanks to a technical facility installed, after which PTA in collaboration with Police has raided and closed many illegal telecom businesses throughout the country.
PTA got implemented IMEI system to restrain handset thefts, through this facility; customers can block their mobile phones if they provide IMEI and other details.
Pakistan Telecom Sector successfully implemented the Mobile Number Portability (MNP) and Pakistan became first country in South Asia to have MNP
There is a Consumer Protection Directorate (CPD) at PTA to protect telecom consumer from illegalities
y y
Almost 92% of Pakistani Population has access to telecom services Total teledensity of Pakistan for Cellular, fixed, WLL was 60.4 percent (till October 2008)
Total Mobile Subscribers in the country were 90.5 million with cellular teledensity of 56 percent (as of October 2008)
Total fixed line subscribers stand at 4.4 million
34
y y
2009
PTCL shares more than 90 percent share in Fixed line market There are total of 2.3 million Wireless Local Loop subscribers in country, WLL teledensity is 1.5 percent
Total number of payphones working in the country, both fixed and wireless are 449,121
y y y y
Total broadband subscribers in Pakistan are about 170,000 Total dial-up users in Pakistan are almost 3.7 million Telecom sector of Pakistan shares almost 2 percent in National GDP In 2007/08 Telecom sector fetched a total of US$1,438 million Foreign Direct investment, that counts 27 percent of total FDI coming in the country
Total Investment made during 2007-08 in all segments of Telecom Sector was about US$ 3,113 million
Total Telecom revenues of Pakistan in 2007-08 reached Rs.278 billion, which were 18 percent more than previous year
y y
Mobile Cellular Companies share 56% of total telecom revenues Telecom sector is also a major contributor to national exchequer7 and deposited more than Rs.111.63 billion only in year 2007-08
Telecom sector submitted a total of Rs.44.61 billion as GST/CED to Federal Board of Revenue in 2007-08
Sources:(PTA, 2007) and (Atta, 2008a)
According to Wikipedia: Part of government that helps in collecting revenues
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References
Afzal,M. 2009, Telecom Industry, P.1 of 1, March 2009, Last modified on April 22,,2009, Accesed 8th May 2009, http://telecom-grid-
pakistan.googlegroups.com/web/Telecom+Industry+-+Mar+09.mht?gda=xi35alAAAADtMOj2qrYsNWGxA5pa5bwtOb8vJJoP6p1UVrf5iiCtRavpkz_dE2TvlMip6cvaYI01Gw0X_4JUbjDaAxz-uI5bcVT3VtYGKLco-_l-8AzjQ. Atta,A. 2008a, Some Facts about Pakistan Telecom Industry, p.1 of 1, December 29, Accesed 8th May, 2009, http://www.propakistani.com/2008/12/29/some-facts-aboutpakistan-telecom-industry/. Atta, A. 2008b, World Telecom Day - Facts about Pakistan Telecom, P.1 of 1, December 27th, 2008 at 1:54 am, http://greenwhite.org/2007/06/29/career-prospects-inthe-telecom-industry-of-pakistan/. Bakai, N. 1999, Data taken SE Asia Workshop on Internet: South Asian Realities and Opportunities, April, Pak Telecom,Dhaka, Pakistan, Accessed: 9th May 2009, http://www.callpakistandirect.com/CallPakistan/pakistan_telecom.html. Bhatti, B. 2007, WLL: Market Overview and Trends in Pakistan, CDMA,
Telecommunications, WLL, Wimax, Wireless, P.1 of 1, Published on August 15, 2007, Accessed: 9th May 2009, http://telecompk.net/2007/08/15/wll-market-overview-and-
36
trends-in-pakistan/.
2009
Callpakistandirect.com 2009, Pakistan Telecommunication History, P.1 of 1, Accessed: 9th May, 2009, http://www.callpakistandirect.com/CallPakistan/pakistan_telecom.html . Khan,S. 2009, Career Prospects in the Telecom Industry of Pakistan, P.1 of 1, Published: April 28th, 2009 at 9:21 pm, Accessed: 9th May, 2009,
http://greenwhite.org/2007/06/29/career-prospects-in-the-telecom-industry-of-pakistan/ Atta 2008a, Op cite P.6. NTCPK 2004, Mobile Companies Review, May, P.1 of 1, Accessed:8thMay, 2009, www.ntcpk.com/. Pakistan Division, Telecommunications July 13th Authority , 2003, De-Regulation Policy for the from:
Telecommunication Sector, Ministry of Information TechnologyIT & Telecommunication P.5-6. Downloaded http://www.pta.gov.pk/index2.php?option=com_content&do_pdf=1&id=441. PTA 2007, Annual Report 2007-2008, Economic Performance of Industry, Chapter 1, P.2., Published: 5thJune, 2009, Downloaded from: http://www.pta.gov.pk/index2.php?option=com_content&do_pdf=1&id=1033. PTA 2007, Op cite P.6. Atta 2008a, Op cite P.6. PTA 2008, Telecom Economic Indicators, P.1 of 1, Updated: April, 16 2009, Accessed: 8 May, 2009, http://www.pta.gov.pk/index.php?option=com_frontpage&Itemid. =1 Saeed,S. 2003, Pakistan Markets in IT & Telecomm Convergent Technologies, p.2 of
th th
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2, April 2003, Accessed on 9th May 2009,
2009
http://www.the-south-
asian.com/April%202003/Pakistan%20IT%20markets-technologies-2.htm . Saeed, Op cite P.11. Ibid, P.11. Telecompk.net 2009, VoiP in Pakistan, P.1 of 1, Accessed: 9th May, 2009, http://telecompk.net/service-providers/. PTA 2008, Op cite P.15. Wikipedia 2009, Pakistan Telecommunication Company Ltd, No publish date Available, Last modified, as cited by Google Chrome: 8 May 2009, at 15:57 (UTC), http://en.wikipedia.org/wiki/Pakistan_Telecommunication_Company. Ibid, P.19. Ibid, P.19. Ibid, P.19.
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Glossary
i. 3G
Its a Mobile phone communication standard that supports higher data rates than 2G (The technology used in GSM/GPRS based services).
ii. Broad Band

A variant of DSL, with more speed than DSL or ISDN works on the pre-laid telephone lines as of PTCL
iii. DSL
DSL is a family of technologies that provides digital data transmission over the wires of a local telephone network. DSL originally stood for digital subscriber loop, although in recent years, the term digital subscriber line has been widely adopted as a more marketing-friendly term for ADSL, which is the most popular version of consumer-ready DSL. DSL can be used at the same time and on the same telephone line with regular
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telephone, as it uses high frequency, while regular telephone uses low frequency.
iv. EDGE
Enhanced Data rates for GSM Evolution (EDGE), Enhanced GPRS (EGPRS), or IMT Single Carrier (IMT-SC) is a backward-compatible digital mobile phone technology that allows improved data transmission rates, as an extension on top of standard GSM. EDGE is considered a 3G radio technology
v. GDP
The gross domestic product (GDP) or gross domestic income (GDI), a basic measure of an economy's economic performance, is the market value of all final goods and services produced within the borders of a nation in a year.
vi. GPRS
General packet radio service (GPRS) is a packet orientedmobile data service available to users of the 2Gcellular communication systems global system for mobile communications (GSM), as well as in the 3G systems. In the 2G systems, GPRS provides data rates of 56-114 kbit/s.
vii. Growth Rate

It is Year-over-year change, expressed as a percentage.
viii. ISP
An Internet service provider (ISP, also called Internet access provider, or IAP) is a company that offers its customers access to the Internet. The ISP connects to its customers using a data transmission technology appropriate for delivering Internet
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Protocoldatagrams, such as dial-up, DSL, cable modem or dedicated high-speed interconnects.
ix. Tele-density
The number of landline telephones in use for every 100 individuals living within an area. A teledensity greater than 100 means there are more telephones than people. Thirdworld countries may have a teledensity of less than 10.
x. Telegraph
A communications system that transmits and receives simple unmodulated electric impulses, especially one in which the transmission and reception stations are directly connected by wires.
xi. Wi-MAX
WiMAX, meaning Worldwide Interoperability for Microwave Access, is a
telecommunications technology that provides wireless transmission of data using a variety of transmission modes, from point-to-multipoint links to portable and fully mobile internet access. The technology provides up to 3 Mb/s broadband speed without the need for cables.
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42

Telecom Industry of Pakistan

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Telecom Industry of Pakistan

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Technical and Business Writing Report:

Telecom Industry of Pakistan Present and Future Trends

Haisum Bhatti (0812155)

13th May, 2009.

1.2. Problem Statements

1.3. Research Objectives

1.4. Benefits of the Study

2.1. Geographic Scope

2.2. Technological Scope

2.2.1. Scope based on Data Collection

2.2.2. Scope of Time

3.1. Qualitative Methodology

3.2. Sampling Method

3.3. Data Analysis Techniques

5. Telecom in Pakistan A Brief Overview

6. Telecom Industry of Pakistan Past Trends 6.1. Brief History

Network Capacity [ ALI]

Telephones in service [ ALIs]

145 million 2.542.73 %

Teledensity June 1998

1076 525.48 (M) 3540.630 (M) 1

10,787 6,762 12,500

7. Telecom Industry of Pakistan Present Trends

8. Sectors of Telecom in Pakistan

Figure 2 - Market Share of Mobile Companies

Table 2 - Number of Mobile Subscribers

Figure 3 - Different Mobile Companies

8.2.2. The National Telecommunication Corporation

8.5. Voice Over IP

8.6. Internet Sector

8.6.1. Cable net and Dial up

8.6.2. Broadband and DSL

8.6.3. Wireless Connections

1 mbps= 1024 kbps

Figure 5 - Internet Statistics

9. Effects of Telecom 9.1. Economic Effects

%age share of GDP

Table 5 - GST/CED Collection from Telecom Sector(Rs. in billions)

2001-02 Mobile Basic Telephony * Others** Total 6.9 8.9 2.0

9.7 0.9 20.5

7.7 0.3 26.8

7.9 0.2 36.3

6.80 0.93 44.53

* PTCL and NTC only **Others include WLL/ LDI operators

Table 6 - Foreign Direct Investment in Telecom Sector

Years 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Total FDI 484.7 798 979.9 1524 3521.0 5124.9

9.3. Some Bad Impacts

10. Expected Future Trends

Governmentsrevenue base in the short term Accelerate expansion of telecommunication infrastructure to

B. Pakistan Telecommunication Company

Figure 6 - Imports of Telecom

Figure 7 - Investment by Cellular Companies

D. Some Facts about Pakistan Telecom Industry

The Government of Pakistan gave the status of Industry to Telecommunication Sector

Total fixed line subscribers stand at 4.4 million

Sources:(PTA, 2007) and (Atta, 2008a)

According to Wikipedia: Part of government that helps in collecting revenues

ii. Broad Band

vii. Growth Rate

Protocoldatagrams, such as dial-up, DSL, cable modem or dedicated high-speed interconnects.

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