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The discussions and debates about an apparent slow down in the Pakistani telecom sector are in full bloom these days. While the telecom growth has certainly taken a nosedive and indicators prove this assumption but what would be its impacts on a common Pakistani and more importantly on thousands of people who depend on telecom sector for their bread and butter? This is a question that needs to be answered as we mostly look at the bigger picture with telecom professionals in mind.The increased call tariffs and heavy taxation on balance uploads/mobile cards has badly affected the vendors. I recently had a discussion with some of mobile cards vendors in Islamabad and they opined that their sales have seen a slump of almost 25%-30%. Same is the case with cell phone vendors as the prices are climbing due to devaluation of Pakistani rupee. The decline in business has resulted in job cuts in some instances. These guys get very nominal salaries but still were earning something for their families. If the telecom growth comes to a stagnation point then a massive unemployment among these folks is a writing on the wall.We don’t have exact statistics of people working in telecom related professions (am referring to vendors, cell phone technicians and not telecom professionals) but rough estimates put their numbers at around 100,000 - 120,000. In most of the cases, these people are sole bread winners of their family thus the number of affectees of telecom meltdown will be in millions if there is a major telecom boom burst in Pakistan.There will not be a total crash in Pakistani telecom sector but the growth will remain on a lower end. This means that with the passage of time at least half of these vendors will have to close their businesses resulting in unemployment of 50,000 to 60,000 workers and financial crisis for half a million people (considering the impacts on their families).Can we avoid this from happening? I guess we can’t as the process of ‘natural selection’ is necessary in the telecom sector due to its over saturation. The telecom boom provided job opportunities for thousands of illiterate and semi-illiterate guys and it still is quite common that a guy who has nothing to do lands in a mobile shop. But that would not be the case in future. We have to think some alternatives about these folks otherwise expect a rise in the already high crime rates.
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October 9th, 2008 at 10:09 am
Fraud activities - tricking user into buying airtime and sending it over through SMS/USSD and hope of winning rewards - is on the rise.
BTW - I wouldn’t call it meltdown. The sector continues to grow at twice the GDP even with high pressure of taxes and overall economic situation
October 9th, 2008 at 12:30 pm
Faraz,
Let’s say it a meltdown in the making
The saturation point is fast approaching and coupled with the economic crisis, we can expect a telecom bust here. Anyways let’s see what future has in store.
October 9th, 2008 at 5:57 pm
I allow the author and G&W to use the image at my page (incidentally shot by my very self) to use the image without assigning the credits
October 9th, 2008 at 6:44 pm
Sorry about that T - maybe I’ve been away from the blog for too long but I missed that.
October 10th, 2008 at 10:05 am
Sorry Tee…
October 10th, 2008 at 11:41 pm
Last month I paid 800 Rs. tax on mobile phone bill of Rs. 3200.
I bet it is going to renovate parliament house and presidential palace.
October 11th, 2008 at 8:16 am
To Farzal:
If those committing fraud are content providers registered with the operator — you should file a complaint with the Telecom operator. If they do what is called spoofing — i.e. illegally using somebody’s number to spam people — also complain. We provide a solution that stops such illegal use of the SMS/USSD gateway.
Ivan
October 30th, 2008 at 10:11 pm
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November 7th, 2008 at 9:15 am
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January 13th, 2009 at 1:11 am
Pakistan cellular growth has slowed down as it has started reaching a saturation point. All (except Zong)carriers have developed their infrastructures and a lot of capital is sunk.
These infrastructures can now be used to expand Wireless Broadband (WiMAX or LTE)
Total market size is 100M considering, from 160M population 30% are below the age of 10, means 50M, are not in potential user caregory. The growth of cellular subscribers will be 8-10% a year from here-on.
It is expected that there will be mergers and business diversification or adding new product lines to remain viable and profitable in telecom business.
Mergers will happen in next 12-24 months in and nationwide cellular and Broadband carriers to become unified carriers.
1. Mobilink will remain as #1 and has Linkdotnet with WiMAX as BB service provider.
2. Zong with a cash rich parent- China Telecom, will acquire smaller BB players. Once LTE is launched in 2010, and IF China mobile launches it in China, it will also be launched in Pakistan. The BB decision will not be local.
3. Ufone/PTCL will survive because as 25% stake is owned by Etisalat. It is hoped that PTCL fixed line infrastructure under renovation now will improve and remain a dominating fixed telephony operation with 4-5M lines. Once last mile is renovated they will control 50% of BB market. Etisalat may like to expand market share in PTCL to atleast 51%.
4. Warid+Wateen has the deadly combination, that is if they can expand BB market size and improve broadband quality.
Wateen has the advantage of local loop infrastructure in four cities (at-least) and has to expand before Augere, Wi-tribe and Linkdotnet expand their markets and drown them.
Wateen has the advantage in OFC operations to become a alternate carriers-carrier competing with PTCL if they expand their metro networks in four provinces.
4. Telenor will have to expand into broadband to survive.
5. Regional players will also survive with thier agile infrastructures like worldcall and Multinet.
Remember telecom is a core infrastructure, and their utility is not just in direct customers, but vertical markets like power and gas companies, railways, local governments etc etc….