Telecom industry’s revenue growth has shown nearly two percent negative

LAHORE (MEDIA)

Telecom industry’s revenue growth has shown nearly two percent negative trend quarter on quarter first time in the history of Pakistan due to unfavorable government policies, said a senior official of a leading telecom company.

The revenue fall is shocking for the industry, he said. The industry’s people believed that the unfavourable and ad-hoc polices are the major reason of this. There is an uncertainty about the return on future investment. The News reported last day.

Justifying his argument that government actions are causing revenue fall, he said Eid days turn out to be the highest revenue generating period in a year, but for the last two consecutive Eids the government used to suspend the cellular services on account of security concerns without considering the impact of its action on the industry. The government even did not bother to consult with the industry with regards to suspension of service, he added.

He said the impact of closing of cellular services is not much on nine and ten Mohram (Ashura) – which always are lean days for cellular users. The whole country is in slow mode during these two religiously important days in Pakistan and revenue always remains at the lower side on these two days. However, the suspension of cellular services on Ashura deprives the industry of whatsoever little earning.

First Ramazan is also another slow day for the industry as the cellular usage comes down on that day, he pointed out. The telecom investment has also registered a declining trend due to inconsistent government policies over the last six year. The telecom investment that stood at $4 billion in 2007 reduced to $251 million during July-March 2013.

According to the Economic Survey of Pakistan 2012-13, annual revenue of the telecom sector reached to Rs411.4 billion during 2012, registering a growth of 13 percent over the last year. This is a significant increase in revenue compared to slow revenue growth in the last two years when total telecom revenue growth remained in single digit i.e. 5.4 percent in 2011 and 3.1 percent in 2010. Telecom revenue grew 2.92 percent to Rs323 billion during Jul-Mar 2013.

Despite positive performance by the industry over the years, negative growth in the last quarter has become a serious concern. If this negative trend continues it will impinge on the performance of the overall industry, he feared.

However, in fact the cellular market is moving towards maturity, stability and intense competition since 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, highlighted the survey. Mobilink – which has been the largest player in the mobile market of Pakistan – is losing its market share. The telecom company held 50 percent of market share at the time of deregulation in 2004. Now, its share dwindled to 29.8 percent at the end of Feb 2013.

The new player CMPak – with its aggressive marketing – has achieved a market share of 15.4 percent in less than five years since the start of its operations in Pakistan. Warid has been continuously losing its market share since 2009 and currently has the lowest market share of 10.4 percent among all the cellular mobile operators.

From 2006 to 2010, telecom sector attracted over $6 billion foreign direct investment in the country, which was almost 30 percent of the total FDI in the country. During the last two years, overall FDI in the country reduced significantly. According to the State Bank of Pakistan, total FDI stood $853.7 million during July-April 2013, whereas net inflows of FDI in telecom remained negative during the year on account of capital outflow by some companies.

Slow economic growth was attributed to low investment in the sector. With the launch of 3G/4G services in the country, it is expected that the cellular mobile sector will attract significant investment in next two years.

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