Stagnation Hitting Pakistani Cellcos [2011 Roundup]

With September winding down to close three quarters of 2011, it is an ideal time to reflect on the achievements of any industry. While the chance of the industry players closing off the year on a high remains, the trend adopted in the earlier portions tend to set a tone for speculation.

The local cellular communication industry appears to deviate from a set trend, to more sporadic actions that give a sense of evolving strategies. A complicated industry with constant need for innovation, setting a strategy needs either a concrete vision of market creation or an established mission for market expansion.

2011 seems to have flown by without any major breakthroughs. For most months, the debate on 3G licensing has been the encouraging headline of sorts. However, a debate is all that remains of this topic, which evokes strong comments from some consumers, while others dismiss it as purely eyewash.

In some ways it could be the time spent talking on 3G that aggravates the data-using segment of the market. While high-end devices have made their way across the oceans in no time, services that match up to the specifications of those devices are nowhere in sight. Even the old Berry is kept on a tight leash, with the average subscriber paying full fee for a service reminiscent of a zero-sized model.

It was at the beginning of the year that analysts placed data segment as the new frontier and revenue stream for cellular service providers across the world, beginning with the developed nations and flowing down to the more recent entrants to the mobile arena.

While most of the Asian and African block still has high voice usage, there has been a lack of growth in the sector across the American and European continent. In the latter regions, data usage over mobile networks has increased by leaps and bounds, with services being consistently devised to offer seamless communication through the simple tool of a mobile phone.

For Pakistan, data segment remains a value added service (VAS) with little value for the buck. The dated GPRS/EDGE technology acts like a donkey cart in a world of bullet trains. The service providers pin their hopes on 3G to overcome this lag, but questions remain. Will the current quality of service simply be passed on 3G as well? And as the world moves on with 4G and LTE, is 3G just our new donkey cart of the decade?

Those who argue about other needs of the country requiring more debate are not wrong. Pakistan does need to give precedence to education, health, employment and such factors. And all that requires funds, which any nation earns through taxation and licensing. The unfortunate fact is that only 1 to 2% of the population is classified as taxpayer.

On the flip, the telecommunications industry remains among the top taxed in the country, as well as being one of the largest employers. So any innovation or improvement is likely to have some positive impact on the nation. But remember; the industry provides the service to progress the nation, how we use the service sets our social norms.

In the first 9 months of 2011, the price war continued among all service providers of the cellular space. In terms of resources, there has been movement amongst management and in the operating staff.

Telenor is restructuring to align with a new mission of concentration on services by segment, while riding the easyPaisa wave and entering the black on the financial side having recouped its initial investment.

Mobilink has seen a small exodus of staff, with most reporting a sense of uncertainty in the company since its parent holding institution was gobbled by the Russian giant. Ufone has remained committed to its roots of pushing the price with each new offer or promo, while seeking to become a player on handset bundles.

Warid, which has been the shy one of the industry for the last two years due to courtships of marriage by the bigger players, has undergone some rethinking and appears to be readying itself for more action. Reports suggest that it will become an Isloo resident by the end of the year, moving its head office from Lahore.

Zong has become the champion of the year, scalping more consumers than any other, and in the process carving a nice share of the market for itself. Its introduction of location-based services has made other players scramble to become active on this front as well.

All in all, a few handset launches and some reduced pricing is what 2011 has been about from the mobile service providers of Pakistan. The view of the horizon holds no promise of anything radical being showcased. Maybe, a few promises for 2012 and definitely the continued debate on 3G.

  • article is good but i differ to the statement “The unfortunate fact is that only 1 to 2% of the population is classified as taxpayer”. Better to say that 2% are taxpayer (who pays directly on their income) but 99% people of Pakistan are indirect taxpayers. We pay from food stuff to life saving drugs, from soaps to luxuries, from property to mobile phone and so on. if people are not paying property or withholding tax, who is responsible? public or govt departments those always asking for more budget and manpower (already having surplus manpower).

    • 101% agree with u. This 2% thing is absurd. Govt is abusing people with loads of indirect taxes, yet doing very little for the people.

    • Good point raised.

      However, in that context, the people paying income tax are doubling or tripling up. So they should be exempt.

      Not really the case in any tax economy. GST is applicable in many countries, but it is not a replacement for income/corporate tax which is the lifeline for government revenue.

      Agreed that the government doesn’t do enough for the people. But what are the people doing for the country? It’s the people who litter the road and parks, it’s the people who abuse law, it’s the people who steal electricity, it’s the people who use sub-standard material in buildings and other structures, it’s the people who try to find a way to not wait in lines or follow the rules.

      The government is made up of people; some selected by us, others brought in by those selected by us. We all, in one way or another, know someone in an authoritative position. But have we ever asked that person to make a difference. Not to follow the norm.

  • It was a time when Pakistan Telecom sector was booming and leading in whole region.

    We were the first to roll out GMS network at large scale in the region.

    we were among few those roll out Mobile Number Portability in the world.

    we were the first of its kind to roll out Mobile banking in the continent.

    we were the only successful country to use telecom fund to reach far areas of country.

    We are part of only Industry of Pakistan who paid huge cost for getting license and annual licensing fees.

    We are the only Industry who plays real role in charity and helping peoples of Pakistan at the time of any natural disaster.

    But alas! In return we got this from government,

    WE are getting raped badly in the issuance of 3G licenses and rolling out world’s most successful data network technology UMTS.

    We are imposed with High rate of Taxation, surely WORLD’S HIGHEST RATES OF TAXES on Telecom industry.

    We were always victimized by Government policies and statements.

    We are the only industry whose Employees are even victimized in public because they are part of successful Industry of Pakistan and Public offices are not able to digest living standards of our valued Employees.

    We are victim of personal biases of Government officials to gain under the table financial benefits because this is only industry left in Country making some profits…rest are either moving to BANGLADESH or closing offices.

    We are “THE TELECOM INDUSTRY OF PAKISTAN”…Striving to gain business momentum under present Government policies and huge corruption.

    GOD BLESS OUR COUNTRY, But keep in mind… God Helps those who helps themselves.

    In this country, majority can not give to the needy people but same majority can not see someone growing too.

  • Govt & people both are responsible, but in my opinion, govt is more liable. Atleast govt shouldn’t cry over less tax payers, as it sucks people’s blood and doesn’t do anything in return. Even if the revenue get doubled, there isn’t any guarantee that govt would do sth for people instead of filling their own pockets.

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