Overall business environment of Pakistan remained negative during FY 2008‐09. High inflationary pressures and reduction in buying power of consumer has directly impacted all industries including telecom. On other hand factors like energy crises, currency devaluation, liquidity crises coupled with increase in borrowing cost, industry price war has adversely affected the net worth of the companies.
Based on PTA reported numbers telecom growth for FY 2008‐09 was 17% (FY 2007‐08: 37%). CAGR (Compound Annual Growth Rate) for last four years stands at 33% CAGR. It signifies that overall industry’s growth has slowed down.
Revenues of Mobile Phone Companies
Following Figure indicates that during FY 2008‐09 Ufone market share significantly improved from 15% in 2007‐08 to 19%, while revenue share for other companies remained somewhat stable other than Mobilink.
Total Number of Cell Sites
Revenues Per Cell Site:
At the end of day, return on assets is the key driver for the profitability of business (assuming same cost structure for industry as we do not have access to company’s financials).
Industry has performed very well in last 3‐4 years, regarding the roll out of network, country wide and its usage. Next challenge for all players is efficient network utilization.
Revenues Per Cell Site
Average industry revenue/cell site has reduced mainly because of industry price war, rollout in rural areas (low ARPU generating) & increasing coverage sites.
In terms of Revenue/Cell site Mobilink is the market leader followed by Ufone & Telenor. Coming years are going to be challenging for companies to improve the performance.
We could have better stats for revenues per cell site with Infrastructure sharing enabled. Cellular Companies must realize the demand and should work in hands on network and infrastructure sharing.
Subscribers Per Cell Site
Estimated Active Subscribers in Pakistan
Following stats are drived from yearly revenues divided by 12 (months) divided by ARPU. We have kept ARPU constant at Rs. 275, for all the operators to predict active subscribers in the country.(As per PTA, Rs. 275 was industry wide ARPU for the said year)
Note: These figures can be different from actual active subscribers.
Estimated Active Subscribers
Conclusion:
Despite of the current macroeconomic challenges, Pakistan has lot of potential. Over 160 million population with around 30‐40% population less than 15 years of age, improving literacy rate, urbanization trends, etc are key opportunities for telecom business.
On economic front, slight improvement in economic condition of the country (i.e. buying power/increase in share of wallet) will substantially improve the profitability because of huge subscriber base.
Operators and regulator should also explore the possibilities and expedite the process of infrastructure sharing. On macro level this will have a positive impact on trade deficit (by reducing imports), current account deficit (for instance installation of 1 cell site in a region instead of 1 cell site by each operator will reduce fuel consumption in absence of electricity).
Disclaimer: Numbers used in this report are based on PTA’s annual report for FY 2008‐09, unless stated otherwise.
From: Khurram Naveed
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