Cellcos becoming victims of their own success

28 Jul 2005

Intense competition is threatening to undermine the advances made by Pakistan’s mobile network operators in recent years, with four of the country’s top cellcos confirming that in the last three years, the average earning figure per subscriber has declined sharply from USD25 a year to just USD4. According to Karachi’s Daily Times, quoting anonymous officials from Mobilink, Ufone, Instaphone and Paktel, the average earning return per connection has slumped way below that of other comparable emerging markets as Pakistan’s operators have looked to slash prices in order to grab market share. Officials from each firm confirm that ARPU and profitability per user is very low with one noting that ‘on average it is USD4 per subscriber and for someone it is even below USD4. Till 2002 we were getting an average of USD25 to USD27 per connection’. Nonetheless, the major mobile operators still see a bright future in a country where cellular penetration is so low.

Pakistan’s mobile segment witnessed growth of almost 150% in 2004/05, and by 30 June 2005 the total number of people with a mobile phone reached 12.48 million, compared with 5.02 million two years earlier. Mobilink led the way with 6.45 million subscribers followed by Ufone with around 2.2 million. Instaphone had 524,852 customers while Paktel, which offers both AMPS and GSM services, reported 308,629 and 429,411 subscribers respectively for each technology. Competition has also been strengthened with the arrival of Telenor of Norway whose local unit, Telenor Pakistan Pvt, signed up 836,000 customers in its first four months.