Pakistan Telecom Market Fixes a Yo to Consolidation

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mergerSince 2005, the Pakistani public has been bombarded with the glitz and glam of mobile subscriptions from the five players that make up the local cellular industry. As per statistics released by the PTA, total mobile subscribers crossed the 100 million mark in September 2010, highlighting that almost 60% of the nation was now ‘connected’; encouraging figures for a country that is considered to have over 30% of its population living below the poverty line.

The last 2 years has seen a notable dip in the growth rate of subscribers, after 3 years of unimaginable increases. This highlights what seems to be only dawning on the industry insiders of Pakistan’s telecommunication sector; the pre-maturity of our market.

You see, Pakistan jumped into the mobile arena instead of phasing in slowly, like other nations. There was no long-term plan on how technology should be incrementally innovated and introduced, so that the consumer can keep up as the industry matches the worldwide evolution. Instead, it became a fad and has ended as a stagnant technology that seems more important than life itself.

But what is now ever more worrying is that the companies cannot sustain for too long on the price-war strategy that they have developed. While there are those who argue how this strategy is beneficial to the consumer, the experts state the opposite; companies are avoiding the long-term picture.

Investment into innovation is low and it is likely we may skip many steps before next phase of technology is brought to our shores. For example, 3G services, which have been available in most of the developed world for a decade now, is unlikely to pop up here in the near future. We are more likely to awaken to 4G, once that becomes a norm worldwide.

Hence, the question arises: is it finally the time for market players to consider consolidation in order to move forward? Analysts have long suggested that Pakistan’s cellular market is ideally designed for 3 companies. But with each one of the current five being subsidiaries of foreign holding, it is unlikely we see that number reached soon.

However, the winds of change are blowing, as one player’s lethargic display and negative quarterly earnings have given the incentive for a larger and profitable group to seek acquisition. For the latter, this is the ideal avenue to not only increase its subscriber base, but also gain ownership of expensive infrastructure and alternative revenue streams. For the former, it is the most respectful way to exit the market and save face, as well as get some return on all the investment of the past 5 years.

What about the consumer? Well, it is expected that the remaining four players will begin to work on segmenting the market, and then initiating a focused approach to become leaders in certain areas, rather than everything and everywhere.

So, as teams from the two companies work out the details in the historic city of Lahore, the market awaits the news that should make 2011 a new beginning for the cellular service industry in Pakistan in terms of competition.

  • I am working in Zong and i left Zong and now doing my own business. Zong wants to sell out its Pakistan Operations and Ufone is in talk with Zong to buy whole operations.

    I hope this deal goes well so Zong can do a better business for their employees and partners.

  • Lo jee 2010 mein Warid aur Telenor k merger ki bat chalti rahi aur hua kuch b nahi. Aur ab Mobilink aur Warid k sath 2011 guzar jaeay ga. . . Waisay ager Mobilink Warid ko buy kerti hai tu kis ko benefit ho ga?
    1- Warid emloyee(contractual)
    2-Warid employee (permanent)
    3-Mobilink employees
    Share your view waisay Warid ka network tu Superb hai.

  • Mr. Faisal Jami
    Could you explain it ?
    Share your view waisay Warid ka network tu Superb hai.
    As Warid is one of the best netwrok as per PTA reports and also from some worldwide ranking organization
    You can explain you experince pointwise about stupidity of Network

  • @ RG… Point was share your views on my comments. Just dot(.) lagana bhool gaya tha.
    Let me ask it again.
    Share your views. Waisay warid ka network tu Superb hai. Hopefully now you got my point and do you know meaning of Superb?

    • Now the statement is worth meaning and its true also

      Superb means superb :)if it is same commonly used english word

      Anything can happen after merger but as per merger history ,merger never happend good for employees

  • its true that Warid is being acquired by Mobilink and this is very evident from the fact that Mobile Number Portability is taking place between Mobilink and Warid without any propoer documentation and PTA has taken due notice of this thing. However officialy this has not been announced by the two companies.

  • @. . . Sherry… Yeh kam tu Ufone b ker raha hai MNP wala. Mobilink aur Ufone both porting in number of other operators especially Warid , and Telenor. Without any proper documentation.

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