Emerging Pakistan telecom sector attracts $2.bn FDI in five years

International statistics showed that the telecom sector is a unique and vibrant industry that is constantly evolving because of the new technologies and infrastructure which continue to filter into the market. The overall global telecoms statistics are impressive and experts note that in 2020 there are around 7.7 billion active mobile broadband subscriptions globally, an enormous increase from 3.3 billion just 5 years ago, thanks in part to the deployment of 4G LTE. With mobile technologies dominating the telecommunications sector there is little doubt that the intense focus on the potential opportunities offered by 5G will continue. In 2020 there are over 1.1 billion fixed broadband subscribers internationally – an increase from almost 830 million in 2015; showing there is still room for growth in the fixed broadband sector, mainly in the emerging markets and those transitioning to FttH. It is also said that the true impact from the deployment of 5G is still largely unknown, but if predictions are true — it will have both an optimistic and disruptive impact on worldwide telecoms sector. It will also be very interesting to observe the changes in global and regional telecoms statistics over the next few years — in terms of subscriptions, technology penetration and services.

In the developing countries like Pakistan, telecom sector has emerged among the major foreign investment attracting sectors. Analysis of economic survey of Pakistan showed that this sector has attracted over US$ 2.6 billion Foreign Direct Investment (FDI) during the last 5 years, whereas a total of about US$ 4.5 billion have been invested in the country through telecom players. In terms of overall investment in this sector, the momentum that was started in FY2012-13 for the up-gradation of telecom networks for 3G and 4G services has continued. A significant amount of US$ 200.1 million has been invested through telecom operators during July-December 2018 to March 2019. It is also recorded that the cellular mobile is the main driver behind this investment, which has invested US $158.3 million during the first two quarters of FY2018-19.

Experts also recorded that the Pakistan telecom sector is contributing directly and indirectly in employment generation, financial inclusion, attracting investment, offering innovation opportunities besides contribution of huge resources to national kitty in terms of taxes, duties and other levies. The commercial launch of 3G and 4G LTE services it is also recorded; has opened new opportunities for revenue generation for the mobile operators. With a comparatively tough year, 2018 for Pakistan’s economy, telecom sector stands tall in the overall economy and showed improvement in revenues during FY2018 whereby total telecom revenues reached at Rs. 488.8 billion during the year 2017-18.

Statistics also showed that during the first two quarters of FY2018-19, revenues from telecom sector stood a predicted Rs. 268.8 billion. The progressive approach followed through Pakistan Telecommunication Authority (PTA) for offering ICT access to the citizens of Pakistan by international fibre optic cables, backhaul networks and wireless solution counting 3G, 4G, LTE have resulted in greater than 89 percent of the total population access to cellular mobile services of which 73 percent have access to 3G services and 69 percent have access to 4G services. Statistics also showed that by the end of March 2019, the total number of mobile subscriptions in the country reached at 159 million with the net addition of 8.8 million subscribers during the July, 2018 to March 2019. Biometric re-verification of SIMs in 2014-15 had an adverse impact on the cellular subscriber base.

At the end of March, 2019 the total Teledensity stood 77.2 percent as against to 74.1 percent at the close of last FY2017-18. The Prime driver of Teledensity rise is the growth in cellular mobile subscribers. The mobile and fixed broadband subscriber base explained strong growth during July, 2018 to March, 2019. The Broadband subscribers at the end of March 2019, reached at 68.24 million as against to 58.33 million at the end of previous FY2017-18. The number of net subscriber additions during first nine months of 2018-19 reached at 10 million. At the end of December 2018. Furthermore, the subscriber base of local loop segment has stood 2.70 million as against to 2.76 million as of June, 2018. FLL subscriber base has been steady as 2.56 million subscribers as of June and Dec, 2018 as recorded through the operators. The closure of PTCL’s WLL connections and the mobile substitution effect has resulted into gradual fall of the local loop subscriptions. It is also recorded that PTA, has been ranked 7th largest tax paying organization among its peers during 2018 on its income to FBR. In addition, Telecom Regulator has generated over Rs. 209 billion during June 2013 to March 2019 by its levies, fee and other charges. In order to encourage development of local manufacturing of mobile handsets, PTA took a measure through launching a regime enabling PTA type approval holder firms to organize plants in the country for manufacturing/assembly of mobile handsets. This initiative was first strategic step towards encouraging local manufacturing of mobile handsets in Pakistan. After introduction of this regime, over 16 firms have obtained permissions for local assembly of mobile handsets and have installed assembling plants that are completely operational. PTA has created over 3,200 jobs in the market and enabled young professionals to have skill development in this specialized field. This sector is no doubt is very important for Pakistan’s economic growth.

Worldwide key developments

• There are various consumers managing multiple devices and subscriptions globally.
• Global IP traffic is forecast to grow to nearly 400 exabytes per month by 2022.
• The telecom operators spend billions on telecoms investments and with 5G now on the radar.
• The Penetration rates of mobile broadband paints an interesting picture when comparing the developed markets to the emerging markets.
• The satellite sector has grown significantly in present years.
• Over the next few years there is a slight growth predicted for overall global operators revenue.