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The Pakistan mobile market grew by 6 percent year-on-year in the first quarter, according to the latest Wireless Intelligence data, a return to growth from a year ago when the market suffered a slow down due to tax increases and the after-effects of the global recession. Total connections in the country – the world’s tenth largest mobile market – hit 96.9 million in 1Q10 and should surpass the 100 million mark by year-end.

This month, Pakistan felt sufficiently confident in the market to begin official discussions with operators over the issuing of 3G spectrum. At an event in Islamabad last week, Pakistan’s IT Minister, Sardar Mohammad Latif Khan Khosa, pointed to the high prices fetched in neighbouring India’s recent 3G auctions as evidence of the “bullish mood of investors” in the region’s telecom sector. As well as raising revenue from license sales, the government is looking at mobile broadband to deliver a range of services such as real-time access to medical records, on demand TV, e-education, cloud computing, video calling, real-time weather forecasts and farming information.

The country’s five main mobile operators – which are largely controlled by international players – look better placed to fund 3G rollout than a year ago. However, despite a mobile penetration of just 54 percent, the market is fiercely competitive and operator ARPUs are among the lowest in the world. At Orascom’s Mobilink, which controls a third of the market, first quarter ARPU was just US$2.8, falling from US$3 a year ago, though this is still among the highest in the market. It did, however, improve its EBITDA margin by 3.1 percentage points to 38.9 percent over the same period. Mobilink’s revenue and earnings (EBITDA) in local currency terms rose by 10 percent and 20 percent, respectively, year-on-year in the quarter as market conditions improved.  

According to our data, second-placed Telenor was the best performing operator in the quarter in terms of connections, just surpassing Mobilink in terms of quarterly net additions and recording the highest year-on-year connections growth (16 percent). However, the unit continued to make an operating loss for its Norwegian parent, posting a NOK9 million (US$1.4 million) loss for the quarter compared to a NOK90 million loss a year ago. Telenor’s monthly ARPU in the quarter was US$2.3.

Third-placed Ufone is a wholly-owned subsidiary of local state-owned fixed-line incumbent PTCL, which in turn is 26 percent-owned by UAE-based operator, Etisalat. However, an ongoing dispute between the two owners has put the operator’s future at risk. Etisalat bought its stake in the firm – and assumed management control – for US$2.6 billion four years ago, but it is currently withholding a portion of the fee claiming the government has broken the terms of the contract regarding property assets. Ufone saw its connections base drop 4 percent year-on-year in the first quarter.

Meanwhile, a cost management drive at fourth-placed Warid Telecom saw the operator’s connections base shrink 6 percent year-on-year in 1Q10 as it reined in operating expenditure. Singapore’s SingTel – a 30 percent shareholder – said its share of pre-tax operating losses at Warid declined 19 percent in local currency terms in the quarter, while operating revenue was up 7 percent and operating expenses declined 14 percent due to the cost management measures. Warid also deactivated 2.7 million subscribers in the quarter, which saw its connections base decline by 2.6 million from the previous quarter.

Fifth-placed Zong is China Mobile’s first – and, to date, only – venture outside its domestic market. Launched in 2008 following China Mobile Communications Corporation’s (CMCC) acquisition of Paktel the previous year, the Chinese firm has invested over US$1.6 billion over the last few years building-out and marketing the network. However, it has admitted that it faces a long wait for its return on investment. Zong grew its connections base by 13 percent year-on-year in 1Q10 but commands only a 7 percent market share. A sixth operator – Pakcom (Instaphone) – was shut down last year for non-payment of license fees.

Joss Gillet, Senior Analyst, Wireless Intelligence:

India’s multi-billion dollar 3G auction has heightened Pakistan’s appetite for foreign investment. The Pakistani government is looking for high-cash injections to address the country’s economic challenges, but the market is a very different proposition to India and Pakistan is currently not a profitable mobile market. India has attracted large investments because of the sheer size of its population and the potential it represents for mobile broadband services. Our demographic analysis show that India has got some 480 million potential customers for 3G services overall. Pakistan’s actual population is not even half that size at around 180 million inhabitants. However, Pakistan shares many of the same barriers to entry for 3G services with India such as low literacy levels, low GDP per capita, high currency fluctuations, intense price pressure in a dominant prepaid market, high import taxes on handsets and an often chaotic distribution network. Operators have been arguing for a couple of years that Pakistan is not yet ready to adopt 3G services. It is expected that by setting high 3G license floor-prices, local operators will struggle to cope with the high cost of network deployments, consequently leading to inappropriate services and pricing in a highly price-sensitive market. In addition, mobile operators might not be able to compete with WLL operators, which are already offering broadband services at very competitive and profitable rates. In 2004, during the GSM auctions, Telenor and Warid each spent US$291 million for their licenses, and six years later they are still struggling to make a sustainable profit from 2G/GSM voice services. This is a clear example that the market is not yet ready for 3G and that cost management is operators’ key priority in Pakistan. In India, there are already signs that the high 3G license costs will inflate data services prices and slow mobile broadband growth to rural areas. Regulators in Pakistan – and Bangladesh – should anticipate these issues in order to ensure a sustainable and profitable mobile sector.



Operator Parent Connections
Net Additions
Share (%)
Annual (%)
Penetration (%)
Mobilink Orascom 31.6 0.77 33 12 18
Telenor Telenor 23.3 0.78 24 16 13
Ufone (PTCL) Etisalat / State 18.8 0.32 19 -4 11
Warid Telecom SingTel / Abu Dhabi Group 16.3 -2.57 17 -6 9
Zong China Mobile 6.9 -0.04 7 13 4
    96.9 -0.75 6 54

Pakistan mobile connections (1Q10)
Source: Wireless Intelligence, PTA, company data