What is Pakistan’s telecommunications future?

Profit sits down with Telenor CEO Irfan Wahab to discuss the state of the telecom industry.

Over the past few years, Pakistan’s Telecom industry has shown extraordinary growth on the back of an increased demand for connectivity as businesses and consumers spend more and more time digitally. Particularly, after Covid-19 pandemic, the country’s IT sector has picked up which has further propelled the demand for telecom services. 

Profit sat down with Irfan Wahab, the CEO of Telenor, to discuss the issues, opportunities and developments of the telecom sector and Telenor. 

The quality of service provided by the Mobile Service Operators in Pakistan is not upto the global standards. It is something that is acknowledged by all stakeholders. There is a perception that the big multinationals are just sticking around because they have too much skin in the game. 

“To be honest, we’re (Telenor) very proud of being part of this journey of telecom revolution in Pakistan. One can see that between 2004-2011 the Telecom sector brought in billions of dollars of FDIs, at times around 60% of the total figure. As a result there was an infrastructure and ecosystem developed for the industry including the nurturing of suitable IT talent” says Irfan.

Source: Pakistan Telecommunication Authority

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“But we see much bigger Opportunities. Telecom, just like any other industry, is evolving and transforming. If we look at global research, it is evident that returns on invested capital are squeezed or are squeezing for the industry. Reason is the sector being a very capital intensive one. Every few years the technology changes and then companies have to invest in that in addition to investing in increasing the network and capacity. Therefore, the cost of doing business for us is very high” he added. 

He quoted the Murree snow blizzard incident as an example, saying that “When the catastrophe hit the city it resulted in us having to rush to restore our network as the power was cut off.  Our people were actually carrying fuel to the mountaintop on foot, in their bags on their heads, basically walking through the snow to reach tower sites to make sure that service was restored.” 

He further elaborated saying “in a country where there are infrastructural problems like electricity, stability and security challenges, fuel issues, the cost of operation will inevitably be very high. 

Therefore, to run a sustainable business, these issues need to be addressed. You cannot change the quality of service just by having the regulatory direction change. 

You need to really see how you create an investment friendly business environment. So, more companies can invest and because of (increased) competition, customers will automatically have more choices.”

The capital intensive nature of the Telecommunication industry leads to a bona fide problem of resource duplication and inefficiencies which ultimately lead to lower returns on investment. A solution to this problem, quoted by many industry experts, is increased synergies. The sector should be sharing infrastructure like tower sites, so that the industry might be optimized. 

As per a GSMA report, Pakistan: progressing towards a fully fledged digital economy, Tower tenancy in the country is still significantly lower than the global average, with more than 60% of mobile operators’ towers within close proximity; operators should take advantage of the policy framework to share assets, which as per estimates could cut opex by 35–55%.

Addressing this issue, Irfan said, “When we were building most of our sites back in 2004-2008 period, there were no tower sharing companies. Therefore, we had to build our own infrastructure but now we are sharing and we are sharing quite substantial numbers.

However, I suggest we should move on from passive sharing to more active sharing like in other countries where regulators and the policymakers are moved to the point that they allow for electronics and frequencies to be shared. Because that’s where the biggest synergy lies.”

“Unfortunately, in our country, we’re still waiting for a framework that was promised more than five years ago in the Policy.” He added

 

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Ahtasam Ahmad
The author works as a Sector Analyst at Profit and can be reached at [email protected]

3 COMMENTS

  1. Over the past few years, Pakistan’s Telecom industry has shown extraordinary growth on the back of an increased demand for connectivity as businesses and consumers spend more and more time digitally. Particularly, after Covid-19 pandemic, the country’s IT sector has picked up which has further propelled the demand for telecom services.

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