Industry is all Abuzz with 3G

Major milestone in reaching 3G landmark was achieved last week when Mr. Yousaf Raza Gillani, Prime Minister of Pakistan, nodded for a green signal on 3G policy. Though there are plenty of procedures left before we actually see a live 3G network in the country, but finally it now appears that 3G will indeed surface in Pakistan in less than a year, or say 18 months at most.

Cellular companies, which in the past seemed reluctant to embrace third generation technology, have at once come into hard play to look bolder and more desperate than others to get 3G license. Which is of course natural for them to pretend to be stronger, in a situation when post 3G era will give 3 operators a fresh start regardless of their current subscriber count, while remaining 2 will have to fight for their existence in the long run.

During my talks with operators, all of them were super confident about putting every possible effort to snatch a license to start 3G operations at earliest, however, deep in their thoughts one could sense the reservations. They knew that at most three of them will be able to experience the luxury of 3G, while the other two will have face uncontrollable sorrow plus a route to exit door down the line.

I can tell you that cellular companies didn’t like this 3G policy approval, regardless of what they say before press. Just imagine a market with 108 million customers with established networks, no further capex, rollouts – it was almost fun for cellular companies to sit still and earn the lavish livings out of it.

But this has to change now. For those who want to earn 3G will have to invest at least US 700 million dollars up to US 1.2 billion dollars (license fee plus infrastructure cost), while others will have to become InstaPhone and Paktel of new era. So one thing is clear, they will have to abandon the luxury of sitting still. The time to play their best cards to keep their businesses on the roll has come.

One can argue that celcos can make more money with 3G enabled networks, which seems attainable, but industry estimates suggest that at most 10 million customers out of 110 million will opt for 3G services. I am told that mobile operators are unable to see immediate viability in the plan, but as said above, do or die situation has come.

Market experts opine that merger possibilities will be on the rise in coming weeks and months. They say that they can sensed the demand and probably this is the best time to consolidate to become a team to invest and harvest equally and evenly. Having said this, they rule out any immediate outcome as stock values are on the decline to hit ever low level.

Other experts wanted not to comment on the situation. They probably want to wait for Etisalat to react on the decision, which has an agreement with Government of Pakistan to not to auction new licenses till March 2013.

A segment of market believes that government of Pakistan will with-hold the license fee after auction, and will not allow operators to start operations before this agreed date of March 2013 with Etisalat. Though I haven’t seen policy myself, so I can’t determine how government will conduct the auction and remaining process, but if agreement will Etisalat is indeed in place then things can go shaky.

Etisalat will probably go to court, given GoP is unable to convince them and they aren’t happy with the auction, which will buy government some more time, until March 2013 will come and everything will settle down.

Clearly government wants to make money out of this, this 3G policy approval has further confirmed that they want it quick – because the future of current government is getting uncertain with every passing day. So no matter what happens, one thing is sure: 3G bidding is going to happen soon, but when can you experience a 3G network still remains a question mark.

Let’s wait for the time to see how this whole thing unrolls.