Telecom Industry in Pakistan 2010 Review

For years, Pakistan's telecom sector has been flourished tremendously, seemingly stuck in the mid-20th century. From 2.1 phones per 100 Pakistanis in 1999, the number of fixed lines has crept up to just 2.9 per 100 today. And while cellular has been more dynamic and rapid, only about 5% of Pakistanis have cell phones.

All that is about to change in the technology and mind set of the people in Pakistan. The government is taking Pakistan's telecom future seriously and has deregulated the sector. As a result, scores of new private entrants are gearing up to provide service, and since June cellular subscriptions have shot up by 56%, to 7 million -- making Pakistan one of the fastest-growing cellular markets. Within the next 18 months the number of phone lines -- both fixed and mobile -- in Pakistan is expected to double. "It's an absolute revolution.

Companies from as far away as Norway company names Telenor has been tempted by Pakistan and its population of 140 million. Since July, 2003, regulators have handed out more than 200 fixed, mobile, and long-distance licenses to some 50 companies. Although there will surely be a shakeout with so many new entrants, officials believe operators will pour as much as $8 billion into networks and equipment over the next five years, compared with just $1.5 billion since 1999. Karachi-based TeleCard Ltd., for instance, in January launched a $200 million fixed-wireless network, and expects to have 2 million subscribers within three years.

Adding to the competition will be a privatized Pakistan Telecommunications Company. the state-controlled carrier that had a monopoly until last year. After four years of often rancorous discussion, Islamabad in November finally settled on a plan to sell off a controlling 26% stake to investors by mid-2005.

Current management is already gearing up to take on the new rivals. The company plans to add 2.4 million lines by June, increasing its capacity by 50%. And over the past year, PTCL has cut rates twice, though new entrants have proposed prices that are even lower.