SAARC : On a Growth High

It is an exciting time to be in the SAARC region, especially when it comes to
telecom. The region has seen immense growth in the area of telecommunications in
the last few years. The subscriber base has doubled in many SAARC countries and
this despite the fact that the region offers the lowest tariffs in the world.
Even global players are eying the SAARC region to set up manufacturing bases.

Distinct Achievements

Pakistan has taken a lead in MVNO and mobile number portability. Sri Lanka
is the first nation in the region to run NGN and 3G trials. Bangladesh has
worked extensively for providing connectivity to its largely rural population
with GrameenPhone. Maldives has the highest teledensity in the region. Nepal and
Bhutan are putting in efforts to battle the challenges posed by a difficult
terrain, to get its citizens connected

Pakistan

The telecom industry in Pakistan is booming; last year, approximately 2 mn
mobile subscribers were added every month. In the previous year, the sector grew
by 80% while the average growth rate in the last four years has been more than
100%.

According to the latest figures released by Pakistan Telecommunication
Authority (PTA), the cellular subscriber base in the country reached 78.7 mn in
January, recording an increase of about 1.9 mn subscribers or a 2.4% growth from
the previous month. This addition has taken the cumulative increase over seven
months (July-January) of FY '08 to 15.6 mn subscribers or 25%. The cellular
mobile density, as a result, has touched 49% as against 48.6% in December 2007.
The major highlight of the January figures was the fact that Telenor became the
third cellular operator, after Mobilink and Ufone, to cross the 15-mn mark, as
its subscriber base rose by approximately 754,000 in January 2008 to 15.4 mn.

While the subscriber base of Telenor continues to grow at a brisk pace, Ufone
has seen its market share dip consistently over the last few months.

The major beneficiary of this marginal decline has been Telenor, improving
its market share by 1.9% over the same period to stand at 19.5%. However, there
has been no change in the market share-based standings of major players-Mobilink
continues to occupy the top slot with a market share of 39.2%, followed by Ufone
(20.9%), Telenor (19.5%), and Warid (17%).

Network coverage of almost 90% of the total population of Pakistan has made
the industry even more attractive for foreign investment. Industry analysts say
there is still a great margin of growth in this industry; in 2003-04, the sector
was offering 466,068 direct and indirect employments and now it is more than
double at 1,366,698. Intense competition is seen in the telecom sector and all
companies are trying to take edge over each other, which is helping subscribers
as they are getting advanced and new packages at low prices.

According to Pakistan Telecommunication Authority's Industry Analysis Report
2007, out of 376 tehsils across Pakistan, almost 77% are covered with mobile
networks. In 2004, there were less than 2,000 cell sites, and today, that number
is more than 17,500.

Also, WiMax networks and wireless broadband services have been commercially
launched across the country, heralding a new milestone in the telecom sector of
Pakistan. The launch of commercial WiMax services has positioned Pakistan as the
leader in the region to initiate wireless broadband services that would be
available to its consumers nationwide.

With the launch of WiMax services in Pakistan, the subscribers to this
service will be able to make video calls and telephony through special handsets
while callers will be able to see live video/picture of each other in addition
to voice conversation. Users will also enjoy wireless broadband services and
will be able to use the Internet at a much faster pace as compared to normal
dial-up Internet or fixed line broadband services. These operators also aim at
providing broadband data solution for corporate users in Pakistan.

At present, Wateen Telecom, an international telecom player, is offering
commercial WiMax services in most parts of the country. Mytel, a local operator
in Peshawar, has also launched its commercial operation of WiMax in Peshawar. On
the same front, other wireless local loop operators, including Burraq, PTCL, Z-WLL,
and Cyber Internet, are busy deploying WiMax networks. All these operators are
in their testing phase and will soon be able to offer commercial WiMax services
in the country.

A shocking incident that prevented Internet users in the world from accessing
the extremely popular YouTube website for several hours was also in news
recently. It was caused by the government of Pakistan, attempting to block
domestic use of the website.

The loss of YouTube for a few hours in itself is nothing more than a minor
inconvenience. But that would be overlooking the significance of this outage.
Just a few weeks ago, a broken fiber-optic cable in the Mediterranean switched
off the Internet in Egypt. The ripple effect caused difficulties throughout the
Middle East as well as in India.

The problem began when officials at Pakistan Telecommunication Authority
instructed over seventy ISPs to block access to YouTube. This order was given
because of what Pakistan sees as anti-Islamic movies being shown on the Google
owned website. The planned blockage was intended for domestic services within
Pakistan. But because of the technical error, approximately two thirds of all
YouTube viewers around the globe lost contact with the page.

Sri Lanka

The Sri Lankan authorities have taken many significant initiatives to boost
telecom in the country. The government has funded the installation of payphones
across the countryside. Digitization has almost reached 100%. Sri Lanka is also
the 3G capital of the SAARC region.

Two recent studies have found that Sri Lanka is among four countries that
offer most affordable mobile services to the poor in Asia and the world.

The first study conducted by LIRNEasia, a regional policy and regulation
think tank, has found that the costs of using mobile telecom services are among
the lowest in South Asia for all types of users. For the low user, essentially
the poorer user, the average monthly cost of using a mobile in Sri Lanka is as
low as $3.83 per month if using prepaid. Sri Lanka came in the fourth place in
the affordability rankings for low users, not far behind Bangladesh ($2.46) and
Pakistan ($3.34) and very close to India ($3.72). For post-paid users, the
lowest low-use basket was in Bangladesh ($7.14). India, Pakistan, and Sri Lanka
followed.

When the prices are converted to dollar purchasing power parity, to better
reflect affordability, Pakistan offers the lowest low-user prepaid basket
($10.57) and is followed by Bangladesh ($11.66), Sri Lanka ($13.39), and India
($15.04). A second study by Nokia has found that Sri Lanka has the lowest 'total
cost of ownership' or TCO within a group of eighty emerging markets. While the
average TCO was found to be $13.16, Sri Lanka was among the only four countries
(the others being India, Bangladesh, and Pakistan) to have a TCO below $5. This
is a significant achievement as the TCO is a critical factor in determining
mobile subscriber growth.

Bangladesh

The rate of subscriber growth in mobile telephone networks slowed down in
February, with the country's six mobile operators adding 1.14 mn new users as
compared to 2.05 mn in the previous month.

According to the latest figures released by Bangladesh Telecommunication and
Regulatory Commission (BTRC), up to February 2008, the total mobile phone
subscriber reached 37.55 mn, a 68% increase of base over the same period a year
ago.

GrameenPhone, a leading operator in the market, added 0.32 mn customers in
February, which is 0.08 mn less than that in the previous month. In January
2008, 0.40 mn subscribers were added to the Grameen networks. The subscriber
base reached 17.20 mn by the end of February.

Grameen's close rival, banglalink added 0.43 mn subscribers in February,
reaching a total subscriber base of 7.88 mn.

AKTEL added 0.08 mn to its network in February 2008 which is five times lower
than its nearest rival banglalink. The company's total subscribers were 7.36 mn
by the end of February 2008.

According to BTRC, in terms of subscriber base, the top three companies-Grameen,
banglalink, and AKTEL-contributed more than 95%. And the three other operators,
including the country's oldest mobile operator, Citycell, state owned Teletalk,
and UAE-based Warid, hold the remaining 5% of the market share.

The top three operators have 32.44 mn out of 37.55 mn subscribers (February
2008), whereas the rest three have only 5.11 mn.

According to BTRC, the state-run Teletalk failed to add any subscriber in
February 2008. The company's total subscribers were 1 mn in February.

Citycell's subscribers increased to 1.51 mn in February from 1.45 mn in
January 2008. Warid subscribers reached 2.6 mn at the end of February. The
company's total subscribers were 2.37 mn by the end of January 2008.

Nepal

The subscriber base of incumbent NDCL has reached 1,179,663 including GSM,
CDMA, and WCDMA mobiles whereas that of Spice Nepal is 731,171 GSM mobiles,
hence a total of 1,910,834 mobile subscribers. This quarter has seen a
tremendous growth in mobile subscribers.

NDCL distributed 311,617 new lines in the last quarter whereas SNPL
distributed 28,196 lines in the same period. SNPL now holds 38.26% of the market
share, 6.49% less than the previous quarter whereas that of NDCL has increased
to 61.74% of the total market share. This is due to the conversion of limited
mobility service of NDCL to full mobility service as per the decision made by
NTA. The mobile customer base is growing continuously due to prepaid mobile
scheme, which is approaching the 2-mn mark.

Apart from Kathmandu Valley, NDCL is providing mobile services in forty-three
districts and Spice Nepal too has extended its service in thirty-two districts.
The mobile network of NDCL has now 395 (previous data) base transceiver stations
(BTSs) whereas SNPL has 386 BTS in 900-1800 MHz band. Hence, the number of
subscribers to base transceiver station (BTS) ratio of NDCL is 2,986 in
comparison to 1894 of SNPL. In this quarter, it seems, NDCL focused on
increasing its customer base whereas SNPL focused on installing more BTSs.

Also, there are currently thirty-five ISPs in the Nepalese market. The
penetration has increased by 0.02% in this quarter which is still not very
encouraging. The growth of Internet subscribers in the last quarter was a mere
4,833. Total international bandwidth used is in the ratio of 1:2.18 with 44.41
and 96.89 Mbps for uplink and downlink respectively; hence a total of 139.3
Mbps.

Aiming High

Each country in the region has its core strength in the area of telecom. If
that were to be combined, with the potential of the region so promising, SAARC
is going to be bigger than China in terms of telecom opportunity. India alone
has touched the 250-mn mark in the mobile subscriber base and is now aiming at
500 mn by 2010.

Sandeep Budki

sandeepb@cybermedia.co.in