Pakistan to open fixed line market to outsiders

14 Jul 2003

The Pakistani Minister for Information Technology Awais Leghari has told reporters that his government had drawn up guidelines to deregulate the country’s fixed line telecoms market, currently the exclusive domain of state-owned operator Pakistan Telecommunications Ltd (PTCL). Speaking at a news conference at the weekend, Leghari said the administration had already inked the technical requirements to allow much-needed private investment into the sector, under which potential investors will be offered 20-year concessions for local, long-distance and international services on payment of a fee. Under its proposals, prospective long-distance and international operators will pay a USD500,000 licence fee and will be required to submit a performance bond worth a further USD10 million, whilst local loop operators will be asked to pay USD10,000 for each geographic region in which they wish to compete with PTCL. The new operators will be allowed to interconnect with the incumbent’s network, and their tariffs will be regulated by the state-run Pakistan Telecommunication Authority.

The growth of PTCL’s network has been frustratingly slow in recent years, with the vast majority of the 145 million population still waiting for connection to the PSTN. By May 2003 network capacity stood at 4.85 million lines, up from 4.33 million at the end of June 2002, whilst lines in service numbered 3.9 million, up from 3.66 million; this puts fixed line penetration at just 2.7%, a figure bettered by all of its closest neighbours Iran (18%), China (17%) and India (4%). Under its reformative proposals the government is hoping to double the number of lines in service to between 8.5 million and ten million by 2010 – a feat it believes will be attainable with the requisite heavy investment from overseas investors. Asked whether the new dregulatory stance would alter the government’s plans to privatise PTCL in the short-term, Mr Leghari said the state still planned to sell a stake of around 25% in the operator, but not until market conditions were right. Having failed to drum up sufficient investor interest during its first attempt to partially privatise PTCL in January this year, September 2003 has now been earmarked as a possible launch date for an initial public offering.

CIT's Datafile of Asia-Pacific Telecommunications