Home > Uncategorized > Is Telecom Industry in a Fix over 3/4G

Is Telecom Industry in a Fix over 3/4G

Is it really the indecisiveness of the Government On 3G License Auction or the Industry Itself is not ready (or pushing) for it?

While almost all of the telecom operators in Pakistan are doing (or have done) scenario planning on License auction and Prepared the Business Plans, the push from the industry is not yet visible. There could be many reasons to it. The first and foremost is the clarity on the renewal of GSM licenses. Whether Operator is required to pay the same Licensing fee or there will be a policy review will happen – it is not known yet. Some 291 Million USD needs to be paid if the renewal will be on the same conditions at which the license was awarded.

Another issue is a limbo in PTA affairs. Without a functional Regulator, it is almost impossible to move ahead with the plan – with no chairman, member technical and member finance on board there are no proceedings on this Subject. Even a consultation contract ( on 3G licensing strategy ) cannot be signed before the appoint of chairman and subsequent filling of  the available slots.

While few operators have already deployed some sites and have completed the testing on the possible technical scenarios, it will still require a major overhaul of network infrastructure. Pundits are predicting that the licensing cost itself could start from 300 Million USD, on top the cost of the upgrades on the infrastructure is a major investment decision. Though the financing cost may stabilize a bit but Devaluation of PKR ( expected to reach 110 by end of the year) is a big challenge.

Cost of running the business is going up, maintenance and diesel for generators are the major contributors along with “other cost” related to security of sites and personal – having direct implications on the margins. Cost cutting measures are visible in marketing expenses, human resource optimization and retail strategy.

Pakistani telecommunication  industry is still segmented into two entity verticals, data and Voice. While Focus of Mobile Operators remained on Voice revenues mostly (due to volumes)  , globally Mobile  operators focus has changed to Data and developing the ecosystem for pulling the data traffic. The  data network operators have kept themselves isolated (couldn’t understand why), focusing only on selling the network connectivity. Though CDMA and Wimax operators have tried (to an extent)  to bring the voice through same Account without a major strategy or a focus. The efforts remained mostly to fulfill the license obligations instead of launching Voice as a full fledge commercial service. However continuous technology innovation also played a major role with CDMA and Wimax getting Obsolete worldwide and chip manufactures (for CPEs & handsets) also published the EOL plans for these technologies.

In my Opinion Pakistan Telecom Industry needs to consolidate, it is very difficult for data operators to survive on their own. Similarly Mobile Operators need to offer more products where margins are better – they need to become part of this data ecosystem. Some bold steps of acquisitions and mergers needs to be taken ( though some are happening but with very slow pace ) and for all this Government needs to make sure that a healthy business environment is provided to Investors with better security, business friendly taxation and a long term commitment to the sector.

 If the thought process behind the license auction for 3/4G is just to raise money for the Government, it will adversely affect the industry and long term telecommunication arena in Pakistan.

Categories: Uncategorized
  1. April 27, 2014 at 08:16

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  2. September 5, 2014 at 16:29

    I am very fond of telecom sector and used to explore different blogs for relevant information irrespective to the economy it caters. Waiting for such more articles.

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