Sometimes, in order to gain more control over a situation, you have to let things go. That is most certainly the case with telecommunications, as our cover story alludes to this week.
Pakistan’s telecommunications infrastructure is certainly among the cheapest in the world in terms of prices, and access has been growing in recent years, but it still leaves far too many people out. While the overwhelming majority of Pakistani households has access to a cellphone, not nearly as many people have access to the broadband internet that cellphones have enabled, particularly after the advent of 3G and 4G technology.
We explore an intriguing idea: that one of the best ways for the telecommunications industry in Pakistan to progress would be for the government-owned Pakistan Telecommunications Company Ltd (PTCL) to sell its mobile subsidiary, Ufone. This is something that PTCL has considered in the past, and is reportedly considering once again, and we believe they should absolutely proceed with a sale transaction, if possible.
There are many reasons to favour this transaction, and we lay out many of those in our cover story. But in this editorial, we want to focus on just one: selling Ufone will, paradoxically, consolidate control over Pakistani telecommunications into the hands of the government-owned PTCL, and for that reason, we hope the government’s decision makers will favour a sale.
Here is what we mean by that: right now, Pakistan’s telecommunications industry is largely dominated by the local subsidiaries of foreign companies. Each of them builds out their own infrastructure to run operations. And while they are all obliged to follow all Pakistani laws – particularly national security laws – the data nonetheless is mostly in the hands of foreign-owned companies.
We, as a publication, have no objection to foreign ownership and investment into just about any Pakistani industry. But we believe the Pakistani national security establishment might be more comfortable if this critical industry was controlled locally, which it would be if those multinational companies were more willing to trust PTCL to provide them with the infrastructure they need to operate, rather than having to build it themselves.
Right now, they do not trust PTCL because they see it as a competitor, owing to its ownership of Ufone. But if PTCL were to sell Ufone, they would be more than happy to contract with PTCL for its infrastructure. Selling control of one thing, in other words, would give the government control over a much bigger, much more important thing.
We believe the law ministry is likely correct in noting that such a transaction would require cabinet approval and need to go through the Privatization Commission. We believe such an effort would be well worth the government’s time.