2014 Challenges and Opportunities for Pakistani Telecom sector – Users and Industry perspective

2014 Challenges and Opportunities for Pakistani Telecom sector – Users and Industry perspective | PakistanTribeISLAMABAD – Though we are not amongst manufacturers of gadgets or other technological tools, but, being part of Asia Pacific, Pakistan is considered as a technology hot spot where 190 million consumers live and use different technologies based on their needs or interests.


It is also understood that Telecom sector isn’t the driving force in technological area, but it can be made a lot more than its generic features, like it’s already doing in banking sector initiating branchless/mobile banking in Pakistan with only good regulatory support from State Bank of Pakistan (SBP).

It is also a fact that with over 130 million subscribers (over 72% Teledensity) Pakistani telecom sector is no more in phase of horizontal growth where only more-usage is the only objective to sustain and to maintain the viable business model status.

As 2014 is just few weeks away, Pakistani Telecom sector is facing challenges of multiple nature and, at the same time, is showing its eagerness to avail different opportunities whether created by the technological advancement or by the enhanced level of digital-literacy at consumer side.

We will discuss these challenges and opportunities from lens of both consumers and telecom operators to find out what, why and how they can draw a sketch of viable and sustainable future of technology and telecom in Pakistan?

Industry Perspective:
Pakistan is amongst the countries where mobile and telephone charges are at its lowest level, but on the other hand we have the largest taxation ratio 21-22% (applied on telephone, GPS and value added services) as compared to other Asian countries. In many cases, its two time higher than our neighbor countries.

Another major opportunity is emerging within next few months, it is 3G licensing, but under some conditions. Pakistani government is expecting to earn USD 1,200 million as revenue of 3G licensing fee; however, it has framed a clause as auction’s eligibility criteria saying that the bidder must have its own equipment manufacturing facility with ownership rights. These two SHARAIT (conditions) mean a single bidder will pay USD 350m on account of license fee and will need to invest much bigger amount to establish equipment manufacturing facility.

Telecom industry experts believe that an industry with vertical growth and huge taxation structure can’t invest, especially when other issues like energy crises, law and order situation, raw material and last but not the least corruption/under-the-table-deals attitude are on-board.

In a time, when the overall industry investment is below USD 7-8 billion, further USD 0.8 to 1 billion investments seem impossible for any of current operator.

So in this situation any new bidder can emerge and show its interest in auctioning of 3G license. But again, why an organization consider this investment as a business friendly option in current scenario?

If Pakistani telecom sector generates Rs. 215 (per user average) average annually then it can be considered a viable business model, but due to different issues including regulatory level problems, this revenue average is up to Rs. 170 per annum in some cases.

Pakistan Telecommunication Authority (PTA) has recently implemented biometric verification system putting another burdon on the industry. The telecom operators have to now pay Rs. 40 per verification to National Database and Regulatory Authority (NADRA). Yet there is a dire need to adopt a mechanism to overcome issues at governmental and telcos level; otherwise it’ll impact the consumers badly, who obviously would restrict the usage (one of the few options needs to be utilized for sustainability in vertical growth phase), already below the standard average (Rs. 215 per user).

It is also expected that ‘on one fine morning’ government will set a deadline asking telecom operators to close unverified or non active SIMs/connections. It’ll be a good move for improving law and order situation, but in terms of profitability and sustainability, restricting current subscribers’ base, no matter active or non active, can’t be a good thing.

User/Consumer Perspective:
After the launch of wearable devices and energy efficient long lasting batteries, today’s more aware and digital literate user demands listening his voice, quality, consistency, need-based value added services (VAS) and obviously the user-friendly tariff.

SIM activation offers and time restricted packages with hidden or auto renewal charges can’t attract consumers anymore.

In a recent poll conducted by PakistanTribe.com, majority (34%) of users show dissatisfaction over offers with limitations claimed as unlimited. As many 32% voted against the offers having subscription charges but still depicted as free, 31% say complicated offers are the worst thing from Telecom operators and 3% voted against automatic activation of services.

Today’s digital literate (A person who can use all features offered by any gadget/tool) user demands more value addition from the operators to become an advocate, a loyal consumer and a considerable contributor for the brand.

Even youngsters, currently being approached via fun to music type of communicational platforms, are showing their eagerness to read and compare product features instead of claims based on communicational marketing.

Way Forward:
As an online journalist, observer, feed collector and end-user of the telecom services, I think now is the time to add some basic things in brand’s values set.

1. Listening
If a person faces a problem, he or she demands or needs solution, no matter possible or not. In this situation, the role of listener and mentor comes into reality to comfort the grieved consumer, who just want to share his or her problem. Today, telecom brands can play this role with the help of digital media to relate their platforms with a cause or to communicate with consumers like a good listener/mentor.

2. Digital Literacy
Due to age difference and different educational backgrounds, a lot of telecom subscribers doesn’t know using many services/features offered by the telcos, restricting the extra/more-usage (needed for the vertical growth of the industry).

In this situation, if a Telecom brand produces online tutorial, videos, info-graphics and blog pieces to train the users then in return the brand can easily earn extra revenue, while the country gets advantages with the emergence of more employment, more entrepreneurs and more revenue. Effectively using the model of vocational training, these activities can be done offline (On ground) and Online like virtual education.

3. End of International Clearing House (ICH) to end monopoly of one operator over international incoming traffic, relief to overseas Pakistanis in reducing call rates to Pakistan, and re-establish rule of law by ending corrupt practices.

4. Strong regulator to take independent decisions in recovery of Rs. 35 billion from telecom operators on USF payments and provide level playing field, bring end to theft of costly 3G spectrum by a powerful operator.

NOTE: Point # 3 & 4 added on the suggestion of PakistanTribe.com’s visitor, Founder and CEO of a Pakistani ISP. You can add your POV through comment section below or email me at [email protected]

About the author

Shahid Abbasi

Shahid Abbasi is founder and editor of PakistanTribe.com. with 10 years experience in conventional media, he is one of the pioneers of new/digital media in Pakistan. He tweets @MShahid_Abbasi

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