This report provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in Pakistan. Subjects covered include:
Mobile market slows in Pakistan, but broadband Internet surges with big jump in wireless accessThe much-anticipated surge in growth in Pakistan’s telecom industry eventually happened and it was looking set to continue for some time as the government’s reform plans were progressively implemented. But it was nearly all happening in mobile services and not in fixed-line services as originally intended. The mobile market experienced an extended boom until the national economy started to falter in 2008/09. Despite what was looking like a setback to growth in the telecom sector, it should be noted that a good foundation for future growth had already been put in place.
Efforts by the government of Pakistan to promote the development, modernisation and diversification of the telephone network over the last decade have met with mixed success. As the government moved away from the old state-owned monopoly to a new competitive structure, it made a decision in 2002 to target lifting the national fixed-line teledensity from 2.5% at the end of 2002 to 7% (or around 11 million subscribers) by 2010. It had only achieved 4% teledensity by 2010. And, at the same time, the majority of these fixed lines were in urban areas. This suggests that a more balanced distribution is certainly desirable in the longer term as 70% of Pakistan’s population lives in rural areas.
The other major shift in the fixed-line market came with the introduction of Wireless local loop services in 2004/05 and the licensing of a multitude of operators. This technology has been both expanding the fixed subscriber base and substituting for wireline services. Wireless local loop constituted more than 40% of the total fixed-line subscriber base by 2010.
Whilst Pakistan’s mobile sector had continued to grow through the 2008/09 period, there were already signs of a slowing market. After a reasonably bright year for growth in 2008, there was some easing in the rate of growth in 2009. Growth was seen to be moderating even further in 2010, as subscriber numbers quitely reached the 100 million milestone in the second half of the year (also reaching 60% penetration, up from 47% at end-2007).
Although there were certainly some big challenges facing the market, overall it remained a healthy and competitive one. Mobile networks were also covering more than 90% of the population by this stage. In some respects it appeared that the Pakistani mobile market was reaching a saturation point as the operators had started to shift their focus to value-added services in order to earn increased revenues. Five active operators were fighting for their share of the country’s mobile market, forcing down prices and subsequently Average Revenue Per Unit. In the meantime, debate over viability of 3G in Pakistan was continuing and there was considerable opposition to the plans set out by the Pakistan Telecommunications Authority for issuing 3G licences. The regulator said it was proceeding with its plans.
The focus of the Internet market in Pakistan was finally turning to broadband. For a long period Internet access had been heavily dependent on dial-up services and penetration had remained low; broadband services were almost non-existent. However, in 2007/08 there was a major upturn in broadband subscriptions and, importantly, this surge looked to be continuing, boosted by the spread of competition throughout the market.
There were strong signs that the country was entering a significant broadband development phase. By mid-2010 there had been a tenfold jump in broadband subscriber numbers and penetration against the 2007 figures. The broadband subscriber base had grown by 118% in the year to June 2010. A feature of the rapid expansion of the broadband subscriber base was the key role being played by wireless broadband technology. The various wireless platforms being offered supported around 40% of the 900,000 broadband services in operation by June 2010.
The big challenge in the short term for Pakistan’s telecom market will be to manage the impact of a pronounced downturn in the national economy. There had been a huge dip in Foreign Direct Investment in telecommunications as the overall foreign investment in the country suffered a significant reduction.
Market highlights:Despite a faltering economy and speculation that the mobile market was saturating, Pakistan still managed to grow its mobile subscriber numbers in 2009 and again in 2010, reaching 100 million subscribers (just over 60% penetration) by the middle of 2010;Growth in mobile subscribers had slowed to an annual rate of 8% in 2009 and slowed even further in 2010 (to an estimated 5%), modest indeed compared with the earlier boom years;Importantly, the mobile sector was continuing to grow in the face of a range of challenges;The deregulated market structure was certainly working well in the mobile segment of the market, with five operators competing vigorously for market share;Whilst broadband Internet penetration still remained low in relative terms in Pakistan (a broadband subscriber penetration of 0.5% by mid-2010), 2009/10 had witnessed a continuation of the strong surge in broadband services that started in 2007 and looked set to continue;Growth in the country’s fixed-line market remained sluggish; fixed teledensity stood at less than 4% into 2010 with the numbers expected to only edge up slightly in the short term;One positive factor in the emerging fixed market has been the success of wireless local loop technology which was supporting around 42% of all fixed subscribers by early 2010.Pakistan - key telecom parameters - 2009 - 2010
Category | 2009 | 2010 (e) |
Fixed-line services: | | |
Total number of subscribers | 6.2 million | 6.4 million |
Annual growth | -7% | 3% |
Fixed-line penetration (population) | 3.8% | 3.8% |
Fixed-line penetration (household) | 23% | 23% |
Internet: | | |
Total number of subscribers | 3.7 million | 4.2 million |
Annual growth | 6% | 14% |
Internet subscriber penetration (population) | 2% | 2% |
Mobile services: | | |
Total number of subscribers | 97.6 million | 102 million |
Annual growth | 8% | 5% |
Mobile penetration (population) | 60% | 62% |
Data in this report is the latest available at the time of preparation and may not be for the current year.