Pakistan - Full steam ahead
Isabelle Paradis
November 2006

Even though Pakistan 's number of fixed and mobile subscribers has been growing steadily for the past 6 years, there is still room for considerable development. Total teledensity reached 26.1% in June 2006, compared with 11.9% a year earlier. Most of this growth was however generated by the very dynamic mobile market, as the number of mobile subscribers now represents 84.6% of Pakistan 's total phone connections, compared with 69.7% in 2005.

Telecom revenues have followed a similar growth trend in 2005-2006, with the country's total telecom revenue reaching US$3.2 billion, representing a growth of 30.2% compared with 2004-2005. Pakistan 's booming telecom sector has become the biggest contributor to foreign direct investment (FDI) in 2005-2006, overtaking oil and gas. In 2005-06 the telecom sector attracted US$1.9 billion FDI in Pakistan , compared with US$494 million a year earlier. The telecom sector therefore now accounts for 54.1% of the country's total FDI, compared with 1.3% in 2001-2002.

With the liberalisation of the fixed market in 2004-2005 and the arrival of new competitors in the next few years, the average growth rate is forecasted to reach 25.5% over the next 5 years, translating into 19.4 million subscribers and a penetration of 11.4% by the end of June 2010.

Mobile has been Pakistan 's most dynamic telecom market for the last 6 years, with an average growth rate of 124.3%. In April 2005, two new operators launched service, competing with the four existing operators and stimulating the market even further. The number of mobile customers increased by 170.2% in 2005-2006 alone, to reach 34.5 million and a penetration of 22.1% at the end of June 2006. With a relatively low mobile penetration, Pakistan 's mobile sector is forecasted to continue to grow at an average rate of 31.6% in the next 5 years to reach 124.6 million subscribers and a penetration of 73.3% at the end of June 2010.

Pakistan has one of the least developed Internet markets in Asia , with a penetration rate of 1.6% at the end of June 2006. This poor performance is mainly due to the low penetration of PCs, the large percentage of the population living under the poverty level and/or in remote poorly served areas where building networks has not been financially viable up to now.

As per the regulator's statistics, the number of Internet subscribers reached 2.5 million at the end of June 2006 and the number of users 12.0 million. The situation should however improve in the coming years, with increased competition in the fixed network services, reduction in prices and accelerated network expansion in rural areas enabled by WLL technology. Internet services are therefore forecasted to grow by an average rate of 17.1% in the next 5 years, bringing the number of subscribers to 5.4 million and the number of users to 26.5 million at the end of June 2010.

Broadband services, introduced as late at 2002, are now slowly starting to gain in popularity. At the end of June 2006, there were 57,000 broadband customers in the country, representing 2.3% of the total Internet connections. As networks are upgraded and expanded and as a growing number of ISPs offer the service, the number of broadband customers is forecasted to soar. Broadband connections are forecasted to grow at an average rate of 65.9% over the next 5 years, to reach 561,000 at the end of June 2010.