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Telecom

Executive summary

1.1 Telecom Business environment of Pakistan

Pakistan has an improved business environment; it is evident from considerable inward investment in the telecoms sector over the last few years. And yet, Pakistan still lies nearer the bottom of Business Environment Ranking table in 11th position. On the one hand, Pakistan’s regulator scores very well for its role in encouraging investment, and the market is hugely competitive, offering huge potential for growth, not only in the mobile market, but also high-speed internet, both fixed and wireless.

The Government of Pakistan is benefiting from telecom industry in terms of increased revenues obtained in the form of taxes, increased employment, and access to the inaccessible areas, enhanced economic activities and better living standards. The demand of industry services can be highlighted from the fact that number of cellular subscribers has more than tripled in the last two years. Revenues of Mobile sector have increased at an average growth rate of over 80% per year over the last few years, despite the unhealthy forecasts due to global and regional socio-political situation. The increase in revenues is mainly due to sharp rise in the number of mobile subscribers and reduction in tariff.

On the positive side, Pakistan’s telecoms sector currently contributes about 2% of the country’s GDP and total revenues reached Rs. 236bn in 2006-2007. The sector received US$1.8bn of FDI in the last fiscal year, accounting for 35% of total FDI in Pakistan. These are all figures that go to suggest Pakistan’s telecoms sector is in great shape and offers the investor huge opportunities. Although economic growth is likely to remain robust in the immediate term, we are concerned at Pakistan’s growing political uncertainty along with a tighter monetary policy that is likely to constrain growth in the current fiscal year.

1.2 TELECOM GROWTH

There are three main areas of telecom in Pakistan

• Cellular...