Cellular Sector of Pakistan: Overview
Pakistan Telecommunication has published its quarterly report for Oct-Dec 2010. Derived from the report, we are presenting here an overview of cellular sector of Pakistan.
Note: All stats and figures are till December 31, 2010 – however, few stats as mentioned explicitly are till January 31, 2011.
Cellular industry of Pakistan has matured into a competitive and progressive market which requires new ventures to be explored by cellular operators and ultimately delivered to end users.
From a mere 5 million cellular subscribers in 2004, cellular subscribers jumped to 100 million in 2010. Voice has been the focus of cellular operators since the inception of cellular mobile services in Pakistan but now the focus is shifting towards utilizing the huge potential lying in data and value added services (non-voice).
Pakistan’s cellular sector is best known for low-cost mobile connection charges, reduced tariffs, almost complete coverage area and better mobile services for the general public throughout the country.
As of Today, cellular teledensity has reached 62.5% from just 3.3% in 2004 while almost 92% of the land area and more than 10,000 cities/towns/villages are under the umbrella of by cellular services.
From only 2000 cell sites to 30,417 in just six years, cellular services have reached to every nook and corner of the country. However, there still exist challenges for the regulator and industry alike such as quality of service, heavy taxation, lack of local content on mobile phones and economic slowdown.
Cellular penetration in the country has reached 62.5% at the end of January 2011 which means that every 6 out of 10 people in Pakistan owns a mobile connection. cellular penetration had a topsy-turvy trend in the recent past due to continuous data cleaning process by the operators and blockage of un-registered SIMs by the operator.
According to statistics made available by telecom operators, there were 104 million cellular subscribers in Pakistan at the end of January, 2011 as compared to 99.2 million at the end of June, 2010 showing a net increase of 4.8 million subscribers over the last seven months.
Almost all of the cellular mobile operators have contributed in this subscriber addition and managed to maintain positive growth trend during the last two quarters.
Mobilink reached 32.1 million subscribers followed by Telenor with 25.1 million cellular subscribers. Ufone performed well during the last four quarters and managed to increase its subscriber base to 20.4 million whereas Warid has 17.6 million subscribers and Zong holds 8.9 million figure till January, 2011.
Cellular Market Share
Cellular market is moving towards maturity, stability and intense competition as operators are dedicating their best efforts to achieve a higher stake in the overall market share. Over the last calendar year, cellular market share has not altered significantly.
Mobilink still leads the pack with 31% market share while Telenor stands at 24%. Ufone increased its market share to 20% and Warid has 17% stake in the overall subscriber base. Zong has improved its market share and reached at 8% at the end of December, 2010.
Cellular revenues stood at Rs. 126.5 billion during the first two quarters (Jul-Dec 10) of FY 2010-11 as compared to Rs. 122.6 billion for the last two quarters of FY 2009-10.
Quarter-wise analysis of the revenues as shown in figure below reveals that revenues have been on the rise since the start of year 2010, however, there was a dip in the quarter of Jul-Sep 2010 due to huge loss in revenue reported by Mobilink and Telenor.
Mobilink being the SMP has the highest stake in overall revenue of the mobile cellular market. Its revenue during the last four quarters stood highest followed by Telenor. Ufone has steadily grown its revenues sitting at the third spot. Warid lies at the fourth spot while Zong is catching up.
The hallmark of the success of any service pertains to its geographical presence and coverage in a country. In case of Pakistan from hills to plains, east to west, urban to rural, cellular services have reached every nook and corner of the country.
All cellular mobile operators have collectively erected 30,169 cell sites by the end of December, 2010 as compared to 30,126 by the end of June, 2010.
Since major cities and towns have already been covered by the cellular services, therefore, the focus of cellular operators has shifted towards unexplored areas where tough physical conditions take longer than usual to install base towers.
Above given table shows an interesting comparison of the cellular operator market share and their respective share in cell sites. Among the cellular operators, Mobilink has the highest number of cell sites i.e. 7,952 and 26% share in overall cell sites.
However, if compared with its market share of 31% and no net additions throughout the year, it is probable that focus of the company is more towards increasing its subscriber base rather than expand its existing infrastructure.
Similar is the case with Telenor, Ufone and Warid who lag behind in infrastructure share as compared to their respective market shares.
Zong is the only cellular operator which has a significantly higher infrastructure share rather than its market share. Despite being the smallest operator, Zong has focused more towards raising the network realizing the potential for future growth in the market.
Average Revenue Per User (ARPU)
Average Revenue Per User (ARPU) is one of the key indicators to the financial status of telecom market in any country. Pakistan’s cellular companies had to face a tough time by the end of last year due to amplified fixed investments and global recession. However, the cellular industry has bounced back from this temporary shaky period and industry ARPUs are on the rise ever since.
The industry reached a collective ARPU of US$ 2.48 by the end of FY 2009-10 and currently, it stands at US $2.53 as of December, 2010.
With the upcoming 3G licensing, it is expected that rise in ARPU will sustain for a longer period of time as cellular operators owe to find new revenue streams via data services and Value added services.
Cellular international traffic of Pakistan reached a record high with 3.4 billion minutes recorded in the first two quarters (Jul-Dec 10) of FY 2010-11, compared with 2.8 billion minutes during last two quarters (Jan-Jun 2010) of FY 2009-10.
This shows that cellular traffic has increased by 22% thereby establishing the fact that mobile usage is increasingly becoming the preferred medium of communication for inbound and outbound calls to Pakistan.
Total outgoing traffic trend as depicted by figure reveals the steadily growing trend of making calls from Pakistan to other destinations around the world as 0. 96 billion international outgoing minutes have been recorded during the first two quarters (Jul-Dec 10) of FY 2010-11 as compared to 0.93 billion minutes in the last two quarters of FY 2009-10 (Jan-Jun10).
Similarly, international incoming traffic has also been growing continuously for the last two quarters and reached 2.5 billion minutes as compared to 1.9 billion minutes during previous two quarters (Jan-Jun 10).
The increase in traffic is attributed to the low international tariffs and bundled international packages being offered by cellular mobile companies.
Short Messaging Service (SMS)
Short Messaging Service (SMS) is one of the important features of cellular mobile services and a vital source of revenue for cellular companies. Figure below shows a steadily growing trend of SMS over the last five quarters.
All cellular companies generated approximately 100 billion SMS during Jul-Dec 10 as compared to 86 billion during the preceding two quarters. This shows a 16% increase in the SMS traffic in just two quarters.
Ufone leads the SMS traffic parameters by a clear margin followed by Telenor and Mobilink. Warid and Zong have significantly low SMS traffic as compared to their competitors.
This huge rise in the SMS traffic owes largely to the attractive and wide range of bundle packages being offered by all the operators. Daily, weekly, fortnightly, monthly even unlimited packages are being offered at very low rates by cellular companies to cap the true potential of this value added service.