Telecom News Bulletin

This quarter’s Pakistan Telecommunications Report sees a revision to ARPU and broadband forecasts following YE09 data published by operators and the Pakistan Telecommunications Authority (PTA). In addition, we have paid attention to developments occurring in the regulatory section, of which there have been a number of changes.

The broadband market continues to be dominated by incumbent PTCL. At the end of 2009, the PTA revealed there were 643,892 subscribers, representing less than 1% of the population. While high bandwidth costs resulting in expensive broadband tariffs, as well as the cost of owning a PC or laptop, remain high, it is encouraging to see that during 2009 the sector grew by 141% y-o-y. This was up from a 110% y-o-y increase in 2009.

We are also seeing a change in the types of broadband platforms being used with the more commonly used DSL falling in favour of wireless alternatives such as EV-DO and WiMAX. Although, we expect that this remains expensive, given that two-thirds of the population reside in rural areas with poor fixedline infrastructure, wireless broadband should continue to expand at a rapid rate (see broadband section). There remain concerns over regulatory independence, however, and we have seen a crackdown on access to internet sites. In May 2010, the PTA blocked access to social networking sites Facebook and You Tube, citing the growth of sacrilegious content. This shows some control by the government on what may be viewed online.

The deteriorating economic situation as well as political situation continues to dampen investment prospects for the country, while ARPUs have been heavily hit as a result of customers cutting down on spending. At the end of 2009, the two largest operators, Mobilink and Telenor, accounting for around 55% market share, had witnessed a decline in market average ARPU to US$1.72 from US$2.04 in the previous year. In particular, Mobilink saw a significant decline in 2008, and Telenor’s ARPU suffered a dip in the following year.

While the economy has been responsible for lowering ARPUs, it is also a result of high prepaid subscriber mixes of around 90% plus, while the promotions and campaigns of operators have encouraged the growth of prepaid customers further. By the end of 2010, we are forecasting market average ARPUs of US$1.70 before falling further to reach US$1.33 as of 2014.