State of Telecom Industry in Pakistan

Here’s Pakistan’s mobile subscriber data as of May 2007. Total number is nearly 61 million subscribers. The chart below shows the market share for the mobile companies, data and figure courtsey of PTA. Note how Telenor has catched up with Warid. Both are tied up at this time.

Here’s another view which shows the relative market share breakdown by Fixed telecom, cellular and wireless local loop (WLL) over the years. Interesting to see how fixed telecom has started declining. The WLL growth has been slower than expected due to a number of technical and non-technical issues. Data and figure courtsey of PTA.

As we all know Singapore Telecom had been working to get a slice of Warid Telecom. The deal has gone through and it is valued at US$758 million, which gives them a 30 percent stake in Pakistan’s third largest mobile phone operator, Warid Telecom. This is a great win-win deal in my opinion. As I wrote before Warid wanted to partner with a leading company to raise funds while keeping control of their business. They have succeeded in their goal. Simple back-of-the-envelope calcualtions show that SingTel paid a very decent price, unlike the Etisalat case a few years ago in which they paid over $1200 per subscriber. My hope is that Singapore Telecom will bring in some of their discipline, attention to detail and care for customers to Warid in Pakistan. We really need that, more than anything else.

Here’s the official stuff:

In a statement, SingTel said the investment was part of a strategy to support Warid Telecom’s continued growth and to enhance its market position.

Warid Telecom is part of the Abu Dhabi Group.

According to earlier media reports, the Abu Dhabi Group will still hold the remaining 70 percent stake in Warid Telecom.

Pakistan’s telecom sector has attracted US$9 billion in foreign investment in the last three years.

How much would an unlocked (or liberated as some call it) iPhone cost in countries like Pakistan? Expect to pay around Rs.75,000 ($1250) or more. Ridiculous, to say the least, in a world where 2.7 billion people live below 2 dollars a day. Now that I’ve finished my rant, lets talk about the availability and technical stuff.

Apple intends to make the phone available in Europe in Q4 2007 and in Asia in 2008. Even though official distribution channels for the world outside US may take a while to be established but the phone (and its clones) will be available soon, depending on how soon hackers unlock it. Most probably consumers in Pakistan will not have to wait long for iPhone. Unlocking is not going to matter a lot as the original network related features of the phone were not state-of-the-art to begin with. Let’s see when the 3G version of iPhone comes out.

Why would iPhone matter? There are two main areas: one is the breakthrough interface and design. Other is the data features which require a network such as WiFi.

In my opinion, iPhone makes sense for:

Leaving the details to others I’ll just mention one thing: iPhone runs a full version of safari browser, which has recently been introduced for windows as well. The safari browser is an important piece here as it allows developers to create apps. According to fiercewireless at the WWDC conference, Apple CEO Steve Jobs told developers that they didn’t need an SDK to write apps for the iPhone–they can start building Safari-based mobile Web 2.0 apps now. But beware: The Safari browser in iPhone supports neither Adobe Flash nor Java.

On a related note RSS is being touted as a killer application for iPhone but in reality its not the first phone to offer RSS – Flurry already offers RSS on majority of the phones.

Reviews and Further Information:

As mentioned at macworld: For a product that hasn’t even been released yet, there’s sure a lot of information out there about the iPhone. To name a few: Apple’s 40-plus minutes of marketing videos, early reviews and at USA Today, and Newsweek.

I’ll finish this with a quick review of how competitors are handling this threat from Apple.
- pointing out iPhone’s shortcomings
- touting their better network features
- introducing their own rival phones: - See this WSJ article
- Nokia was forced to do a whole re-organization due to iPhone!

In Part 2  I am presenting additional news and views about growth and competition in the mobile industry of China, India and Pakistan. As you will read below, India and China are directly competing to dominate the handset markets of the world. Pakistan is not in the picture as it does not manufacture mobile phones and rakes up big import bills.

First, an analysis by Brough Turner, Comparing Telecom growth in India and China in which he compares the teledensity and growth rates for the two countries from 2006. This is one of the few direct analysis using data available from different sources. He also touches upon the blurry line between mobile and wireless local loop about which I wrote as well.

 
Top 10 Emerging Mobile Markets - Source: Unstrung.com

Second, I am sharing an article titled Tale of two cell phone markets: India and China by Mike Clendenin, published at Electronic Engineering Times. The focus of the article is on mobile handset and electronics industry. Here’s some selected  text, with my comments in italics:

The buzz these days is that India is the “new China” of the cellular world. All the big multinationals have piled onto the subcontinent, chasing trendsetters in Mumbai as well as first-time buyers in remote villages. “They are the key drivers for the marketplace,” said David Taylor, India-based director of strategic operations in Motorola’s High Growth Markets unit.

Expansion in India now rivals China, the world’s largest cellular market. At least 5 million to 6 million Indians are signing up each month and about 7 million in a hot month. China? close to 5 million (6 by some estimates).  The number for Pakistan is 2.5 million based on 2007 data. Overall, China still trumps India for subscribers, at more than 480 million. India is on fire, though. Subscribers nearly doubled last year, to 149.5 million, and should hit 484 million by 2011, according to market researcher iSuppli Corp.

India is adding fuel to an already hot global trend. Since 2002, handset sales in developing countries have jumped threefold, compared with 62 percent in developed countries, according to Strategy Analytics Inc. It forecasts that 65 percent of handsets sold this year will be bought in emerging markets.

Yet the rapid ascension of India shows that not all emerging markets are alike. Beijing and Bombay may both be supersized cities in gigantic markets, but there are probably more differences than similarities in the way these places are growing, especially in the supply chain.

China has a relatively large chip industry, targeting local growth in communications; India does not. Pakistan’s chip industry is relatively insignifcant. China has more than 75 companies making handsets; India has only a few. China develops globally competitive telecom gear; India does not. The list goes on.

This is a relief to multinationals, although they may not publicly admit it. As things stand, global chip and handset makers won’t see a new crop of margin-destroying competitors rise as quickly in India as they did in China.

Read more »

Over the past few months I have been writing about the mobile web trends in the developed world, such as Korea and Japan where new technologies are being tested. What about mobile web in emerging telecom markets of Pakistan, India etc? Even though most analysts agree that mobile web will be important for the emerging markets telecom, the industry is still struggling with the right solutions to make it happen. Here’s my analysis of the situation.

1. First phase of mobile web was played out in US/Europe/Korea-Japan. It provided valuable lessons. Those who thought that they could take today’s web and tweak it to squeeze it on to a mobile phone have failed miserably. 

2. The effort to control content and user navigation has hurt the experience of common users. It has also distracted the service providers … their focus has shifted away from the user. (The new CEO of  ATT recently admitted this at NXTcomm). Result: At this time there are too many incompatible solutions.  

3. The convergence of new user interface technologies and phone hardware improvements is promising. Approaches such as widgets, mobile ajax are changing the face of mobile web. Combine that with developments of cheaper phones with long-lasting batteries and expanded network capacities. This is incremental progress so it will be a while before the world sees their impact.

4. It takes a big leap of faith for non-Internet users to do anything beyond basic voice and messaging on a phone. How is the industry going to tackle this issue and establish trust?

5. The billion-dollar question is: Will the mobile web be relevant for rural area users of Pakistan or India? These hundreds of millions of users have not even heard of Internet. What feature set, level of localization and adaptation will be needed for them?

The CEO of Mobio Networks wrote a recent piece in Financial Express: Simply taking web experience on mobiles won’t work. Even though most of it is just advertisement for his company his points about mobile web are also valid for Pakistan. I will present my critique of his product in a later post but here are some excerpts:

The emergence of value added services (VAS) is one trend that is being followed closely and with great interest by industry analysts and policy makers worldwide. In India, the mobile phone has emerged as the most prevalent device to access the Internet. Most of the industry up till now has been focused on investments in wireless infrastructure. Now that a large part of that investment is behind us, attention is inevitably shifting to VAS.

The consumer is asking for the next set of services-beyond ring-tones, wallpaper, games, SMS. However, few VAS providers have realised that simply taking the web experience and miniaturising it for mobile delivery doesn’t work. The consumer is left with a poor experience and abandons the service quickly. 

Read more »

The deal is not final yet but all the news sources have mentioned SingTel as the most likely winner for a stake in Warid, owned by Abu Dhabi Group. Here’s the report from Financial Times. See my last post on this for background. My views on the red hot acquistions market in Pakistan will follow.

Singapore Telecommunications (STEL.SI: Quote, Profile, Research) is likely to buy a 30 percent stake in Warid Telecom in a deal that would value Pakistan’s third-largest mobile phone operator at $1 billion, the Financial Times reported.

Industry sources told Reuters last month that Warid had been approached by several international telecommunications firms and that an agreement could be reached in July or August. SingTel has repeatedly said it was interested in Pakistan’s fast-growing mobile phone sector.

This post continues the discussion of research results from Pakistan’s mobile market. In another interesting study (based on a sample size of 1812, ages 18-60, lower income groups) from LIRNEAsia mobile phone users were asked the main reasons for selecting their primary mobile company. The study clearly shows that coverage is more important in rural areas, tariff is less important. Here’s the comparison of urban and rural trends. (See a larger resoultion image).

Of course whoever gets to rural areas has an advantage. Also see my previous story on how Pakistanis prefer style over features.

According to a recent study by Sir Lanka based research organization LIRNEasia, Pakistan has done well in terms of mobile access at the bottom of the pyramid compared to India and Sri Lanka; however a large gender divide in terms of both access and use exists. I think such basic market research is the key to understand the trends and I commend LIRNEasia on their work in social sector. The following is taken from the report.

A recent five-country survey of telecom use at the “Bottom of the Pyramid”, or BOP, has shown that mobile ownership at the BOP in Pakistan was found to be as high as 23%. Despite having the lowest per capita GDP among the countries studied, Pakistan beat both its South Asian counterparts Sri Lanka and India on this count, with mobile ownership at the BOP in these countries at 22 and 9 percent, respectively. Almost 66% of these mobile connections had been taken up in the preceding year (i.e., since mid-2005).

However the most interesting part of the study for me is where it shows a significant gender divide exists in the telecom area.

Men appear to have more access to mobiles and public phones (including telecommunication centers, public pay phone booths, etc.) than females. Individually owned mobiles are used as the primary phone (most frequently used) by 30% of males, but only 11% of females (See Figure)

Public phones are used as the primary phone by 45% of males, but just 24% of females. Among females, the preferred primary phone (48%) was either a neighbor or friend’s phone or another household member’s mobile phone (compared to 13% of males). A similar, but less pronounced pattern was seen in India, but not in any of the other countries studied.

In addition, phone ownership was lower among females (29%) as compared with males (43%); such differences were not seen in the other four countries.

Read more »

Oman Tel the fixed monopoly which ranked 1st this week among Oman’s top 20 listed companies posted impressive numbers like total revenue of RO 323.6 million during 2006,  a hefty increase of 20% over 2005, and a net profit of RO 81.1 million. So what do you do when your pockets start to get deep… well…. 

First you overhaul your network backbone by migrating to NGN since competition is staring you in the eyes (whisper from the rumor mill is that Nawras, the second mobile operator in Oman is next in line to become the second fixed operator also). OmanTel recently shelled out close to 7 million O.R. when it selected Huawei to beef up its network, which was a repeat of 2005 when, Huawei provided WLL to OmanTel as the sole vendor; ever since both have enjoyed a very warm relationship. It is anticipated that Oman Mobile the mobile ‘semi-arm’ (it’s a long saga) of OmanTel is also riding on the coat-tail of its parent and plans to upgrade soon. The three way tug of war between Ericsson, Huawei and the newly wed – Nokia/Seimens is on for the LAST slice (for now) of Omani Telecom pie. 

Second you start searching for greener pastures beyond your border; and that is exactly what OmanTel is doing. Granted it is a bit late, since most of the new licenses have evaporated despite the huge price tags that they carried and a lot (not all) markets are facing saturation. A number of Gulf operators headed south to Africa but the latest trend has been north to Afghanistan (etisalat), Bangladesh (warid tel), Pakistan (etisalat & warid tel),  and the likes.  

So why now and why Pakistan? 

- The ‘Etisalat’ factor: With a local population of less than 4 million,
Oman has generally followed in the foot steps of its neighbor, UAE, but in a cautious way. Hence, the tourism, real estate projects etc and now the plans of getting into Pakistan, after all following in the footsteps of Etisalat can’t be that bad! Emirates Telecommunications Corp. which bought a 26 percent stake in Pakistan Telecommunications Co. Ltd. for $2.6 billion in 2005 is working on expanding its share to 51%. OmanTel currently commands a subscription base of 1.6 million, a growth of 15% compared to 2005. It’s more like; if Etisalat is the biggest (and yes it wants to be in the top 10 by 2010), OmanTel is the biggest little TELCO in the region. The name of the target is not mentioned but it is believed to be Worldcall, which runs long distance and international as well as wireless local loop services. 

- Proxy Wars: Qatar Telecommunications Co. which coincidently the same week said that it had completed the purchase of a majority stake in Pakistan’s Burraq Telecom, hoping to tap Asia’s fourth-most populous country, is the parent company of NAWRAS, the second mobile operator in Oman and a thorn in the side of Oman mobile, (the mobile arm of OmanTel). Word on the street is that NAWRAS will also become the second fixed operator on OmanTel’s turf. May be Omantel feels that it is time to counter Qtel at both fronts; is Pakistan going to witness the start of ‘Telecom proxy wars’? 

- Yemeni adventure: This is NOT the first time that OmanTel has flexed its muscles. However, their Yemen affair turned sour and they decided to bow out of the third GSM license. UNITEL, a combination of Yemeni and Chinese partners, in addition to some Gulf state investors, came in first in the bid for US$ 149 Millions as license fees, against US$ 100 Millions by the Omanis.May be they feel its time to get up, brush off the dust and saddle up again. 

As this is being posted, OmanTel has stated its desire to grow in the Gulf region as well. 

Welcome to the new ”State of Telecom in Pakistan” at Telecompk.net. Other than the site address change and a few new features on the side bar, not much has changed. You will find it informative and interesting as before. As always any feedback is appreciated.

In this story I’ll review and compare the emerging telecom markets of China, India and Pakistan. Combined together these 3 neighboring countries present one of the fastest growing region for the telecom industry, making them especially attractive for investors and companies. Although the business, technical and political environments of China, India and Pakistan vary significantly, there are many common characteristics as well. Naturally the telecom and service companies are on the look for winning ideas, products and services which can be taken from one country and applied to the other. In general, China is the undisputed leader in manufacturing and India has the edge on services. Pakistan enjoys a better regulatory environment for telecom, with fewer complications such as spectrum shortage and competing standards, as in India.

The deals and cooperation among the telecom sector of 3 countries is growing rapidly as can be seen from the frequent announcements in the media. CMPak is a prime example (and one of the most interesting to watch) which has announced investments of over 1 billion US$ in Pakistan. In Research and education, for instance, Huawei provides equipment and training to University of Eng. & Tech., Lahore. Equipment, R&D and service deals between China and India are on the scale of multi-billion dollars. All of this has a political angle as well which surfaces at times  - but this aspect is beyond the scope of this post.

In this part I’ll present market characteristics, projections and the growth areas in China, Pakistan and India.  In Part 2 of this series I will discuss about the electronics and manufacturing subsectors of the industry. You may also want to see some of my past posts related to this:

• Telecom Growth in China
• Telecom Growth in India
• Low-cost Phones Launched by Nokia and Vodafone
• Challenges of High Growth Mobile Telecom Markets
• China Mobile in Pakistan: Updates (April ‘07)
• Success of Huawei in Pakistan and Beyond

Key Points:

1- The numbers: industry analysts estimate that by 2010 the mobile subscribers will be: 

  * China: from 487 to 900 million
  * India: from 160 to 400-500 million
  * Pakistan: from 58 to 100+ million

2- Rural markets are the focus as urban areas get saturated with phne service. Outside China’s major cities, less than 30% of the population has mobile phones, and in India, where 72% of the people live in rural villages that mainly lack a mobile network, less than 15% of the population owns a mobile phone. The recent introduction of cheaper phones in India by Nokia, Vodafone etc is an example.

3- ARPU fall is higher in China spurring companies to provide value added services. Same trends will follow in India (where VAS will be 17% of market by 2010) and Pakistan - see the article belwo for more.

4- China will remain a testbed for newer technologies such as 3G, mobile advertising etc. Innovative products will be adopted quickly, regardless of the source. China’s fixed broadband access and IPTV market will add to growth.

The emerging markets of China and India get fair amount of media coverage. Sometimes a comparison is also made. Here’s one recent article titled ”Ericsson Aims Deeper Inside India, China” by Wall Street Journal. WSJ reports about how Sweden’s Ericsson is targeting more business in India and China and the challenges it faces. Recently Ericsson signed a $1 billion deal to supply GSM network equipment in China. Here’s a few points from the WSJ article:

In India, Ericsson — the world’s largest wireless-equipment maker by sales — looks set to pick up the majority of an estimated $4.5 billion contract with India’s third-largest mobile-phone company, Bharat Sanchar Nigam Ltd.

In the Pune, Maharashtra, region of India, Ericsson is working with mobile operator Idea Cellular Ltd. and the GSM Association, an industry body, to develop biofuels using local nonedible crops. By reducing the dependence on more expensive diesel power, Ericsson hopes to lower the cost of rolling out mobile-phone infrastructure to rural areas. Cleaner fuel will also reduce engineer site visits and prolong the life expectancy of generators, the company says.

In China, Ericsson faces two potential threats. While the majority of China’s mobile phones currently operate on GSM networks, the government and China Mobile are currently testing a homegrown version of third-generation, or 3G, technology known as TD-SCDMA, which differs from the common standard being adopted across Europe and North America. Ericsson only has an approximate 1.4% share of the total TD-SCDMA contract. ZTE Corp. and Huawei are among the local vendors that picked up a large part of the deal. Nomura says that there is a significant risk that TD-SCDMA can become the dominant technology in China, and if this happens, Ericsson won’t have the cost advantages it has in other mobile technologies.

Stay tuned for Part 2 of this series in which the electronics and manufacturing will be discussed.

Another post in the Disaster management technologies series. Japanese mobile telephone users may soon be warned of an earthquake in their area just before it strikes. Japan’s two biggest operators, NTT DoCoMo and KDDI have announced that they are jointly developing a system to notify customers of an imminent earthquake. Now the first question I have is: What good will it do? What will YOU do if you find out that a big earthquake is coming in 5 seconds?

And the second question is: How will this work? 

The system will pass on information from the Japanese meteorological agency which has developed a way of detecting earthquakes several seconds before the main tremor strikes.

The companies did not say which type of messaging they would use but acknowledged that email — a common way of communicating via cellphone in Japan — would risk overwhelming their mobile networks. SMS is less common in Japan but it is a likely candidate for this kind of alert, I think.

The meteorological agency’s early-warning system detects the first underground tremors that come before the main quake and estimates their intensity before big seismic waves reach the surface.

Japan, which endures 20 percent of the world’s major tremors, prides itself on having one of the world’s most accurate systems for assessing earthquakes and predicting tsunamis.

Source: http://www.physorg.com/news99728548.html