Business Economics TELECOMMUNICATION

8/9/2019 Business Economics TELECOMMUNICATION

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Business Economics

Final Project:

TELECOMMUNICATION

Submitted to:

Madam Hameeda Batool

Submitted By: Muhammad HABIBULLAH 084

Zahid yousaf 166

Aslam javaid 024

Sharjeel arslan 139

Fahid Akram sp10-111

COMSATS INSTITUTE OFINFORMATION TECHNOLOGY

LAHORE.



Telecommunication: Telecommunication is the transmission of signals over a

distance for the purpose of communication. In earlier times, this may have involved the

use of smoke signals, drums, semaphore, flags or heliograph. In modern times,

telecommunication typically involves the use of electronic devices such as telephones,

television, radio or computers. Telecommunication is an important part of the world

economy and the telecommunication industry's revenue was estimated to be $1.4trillion

in 2008.

History of telecommunication in Pakistan: From the beginnings of Posts & Telegraph

Department in 1947 and establishment of Pakistan Telephone & Telegraph Department

in 1962, PTCL has been a major player in telecommunication in Pakistan. Despite

having established a network of enormous size, PTCL workings and policies have

attracted regular criticism from other smaller operators and the civil society of Pakistan.

Pakistan Telecommunication Corporation (PTC) took over operations and functions from

Pakistan Telephone and Telegraph Department under Pakistan Telecommunication

Corporation Act 1991. This coincided with the Government's competitive policy,

encouraging private sector participation and resulting in award of licenses for cellular,

card-operated pay-phones, paging and, lately, data communication services.

In 1995, Pakistan Telecommunication (Reorganization) Ordinance formed the basis for

PTCL monopoly over basic telephony in the country. The provisions of the Ordinance

were lent permanence in October 1996 through Pakistan Telecommunication

(Reorganization) Act. The same year, Pakistan Telecommunication Company Limited

was formed and listed on all stock exchanges of Pakistan

Medium of signal transmission:

• Electric wire

• Optical fiber

• Cable

• Electromagnetic fields

http://en.wikipedia.org/wiki/Transmission_(telecommunications)

http://en.wikipedia.org/wiki/Communication

http://en.wikipedia.org/wiki/Smoke_signal

http://en.wikipedia.org/wiki/Drum_(communication)

http://en.wikipedia.org/wiki/Semaphore_line

http://en.wikipedia.org/wiki/Flag_signals

http://en.wikipedia.org/wiki/Heliograph

http://en.wikipedia.org/wiki/Telephone

http://en.wikipedia.org/wiki/Television

http://en.wikipedia.org/wiki/Radio

http://en.wikipedia.org/wiki/Computer

http://en.wikipedia.org/wiki/Transmission_(telecommunications)

http://en.wikipedia.org/wiki/Communication

http://en.wikipedia.org/wiki/Smoke_signal

http://en.wikipedia.org/wiki/Drum_(communication)

http://en.wikipedia.org/wiki/Semaphore_line

http://en.wikipedia.org/wiki/Flag_signals

http://en.wikipedia.org/wiki/Heliograph

http://en.wikipedia.org/wiki/Telephone

http://en.wikipedia.org/wiki/Television

http://en.wikipedia.org/wiki/Radio

http://en.wikipedia.org/wiki/Computer



Types of telecommunication services in Pakistan:

• Mobile Phones

• Wireless

• Cable or satellite• Internet or broadband services

Pakistan telecom industry:

PTCL

1. Mobilink

2. Telenor

3. Ufone

4. Warid

5. China Mobiles (Zong)

Pakistan Telecommunication Authority:

Pakistan’s telecom market had been struggling for a long time with the transition from a

regulated state-owned monopoly to a deregulated competitive structure. The

government set out plans to increase fixed-line teledensity from 2.5% at the end of 2002

to 7% (around 10 million fixed lines) by 2010. This target eventually became impossible

to achieve (with around 4% penetrations having been reached in 2009). However, in the

meantime, the whole telecom landscape in Pakistan had changed with the phenomenal

expansion of the country’s mobile market. Over the same period – 2002 to 2009 – the

number of mobile subscribers jumped from less than 2 million to more than 94 million.

http://en.wikipedia.org/wiki/File:PakTelecom.jpg

http://en.wikipedia.org/wiki/File:PakTelecom.jpg

http://en.wikipedia.org/wiki/File:Ufonelogo.png

http://en.wikipedia.org/wiki/File:Mobilink.jpg

http://en.wikipedia.org/wiki/File:PTCLnewLogo.jpg



Despite a tightening national economy, coming into 2009 the mobile market continued to

expand at an annual rate in excess of 10%. Internet penetration remained low, however,

and broadband growth had also been negligible, but 2008 saw an upsurge in broadband

subscriptions; importantly, this looked to be continuing, boosted by the spread of

competition throughout the market. This report offers a set of statistics on the Pakistan

telecoms market, as well as information on the regulatory regime.

MAJOR DISTRIBUTORS OPERATING IN PAKISTAN:

Nokia

Sony Ericson

Samsung

LG

Mobile Zone

Cellular subscribers in Pakistan:



Coverage Area Of Different mobile companies in Pakistan:

CELLULAR SUBSCRIBERS

Mobilink Ufone Zong Instaphone Telenor Warid TotalGrowthRate %

2000 114,272 80,221 112,000 306,493 15.39

2001 309,272 116,711 96,623 220,000 742,606 142.29

2002 800,000 350,000 218,536 330,000 1,698,536 128.73

2003 1,115,000 550,000 319,400 420,000 2,404,400 41.56

2004 3,215,989 801,160 470,021 535,738 5,022,908 108.90

2005 7,469,085 2,579,103 924,486 454,147 835,727 508,655 12,771,203 154.26

2006 17,205,555 7,487,005 1,040,503 336,696 3,573,660 4,863,138 34,506,557 170.2

2007 26,466,451 14,014,044 1,024,563 333,081 10,701,332 10,620,386 63,159,857 80.70

2008 32,032,363 18,100,440 3,950,758 351,135 18,125,189 15,489,858 88,019,812 39.4

2009 29,136,839 20,004,707 6,386,571 34,048 20,893,129 17,886,736 94,342,030 1.30

July-09 29,551,075 20,057,079 6,486,338 11,917 21,299,334 18,141,542 95,547,285 1.28

Aug-09 29,840,415 19,607,299 6,556,697 3,575 21,428,286 18,347,366 95,783,638 0.25

Sep-09 30,046,050 19,104,594 6,629,761 1,073 21,658,592 18,468,208 95,908,277 0.13

Oct-09 30,275,979 18,329,967 6,752,031 1,073 21,975,271 18,584,409 95,918,729 0.01

SCO Cellular Subscribers are 285,072

Note: Including AJK & NAs



Telecom Revenues 2008-09



Annual Report of Telecom (2007-08)

PTA has published the 2007-08 annual report which has useful information and statistics

about the performance of the telecom sector and the regulatory activities. Here are some

previews from the report. The telecommunication sector continues to be a major source

of income and foreign investment for Pakistan.

Foreign direct investment (FDI) was US$ 3.1 billion, a fall of 21% from previous year. On

the positive side, there was a 33% drop in import bill of mobile handsets (US$ 446

Million), partially due to the imposed tax of Rs. 500 per handset and 50% regulatory

duty. The FDI and the handset import numbers reflect the tough business and economic

conditions in Pakistan.

Cellular Mobile Density:



Investment in Telecom sector:

With six mobile companies operating in Pakistan, tele-density in mobile sector has

increased

To 58%, rural areas has been benefited from cellular revolution in Pakistan, as

compared to

Fixed lined tele-density of 4%. There are further opportunities for growth in fixed lines

and

Mobile sector. Local and international companies are investing in these areas and

International calling business as the VoIP has been legalized. VoIP sector has increased

Tremendously during last two years; mainly due to large number of overseas Pakistanis

(5/m)

Living around the globe and reduction in calling charges from Pakistan to North America,

Europe and Middle East. Now it is cheaper to call from Pakistan, as compared to a call

from America.

Market Share of Mobile Operators (December 2005)

CELLULAR MOBILE DENSITY

Year Mobile Density

2000 0.22

2001 0.52

2002 1.16

2003 1.61

2004 3.29

2005 8.30

2006 22.21

2007 39.94

2008 54.60

2009 58.20

July - 2009 58.50

Aug - 2009 58.50

Sep - 2009 58.60

Oct - 2009 58.60

Note: Including AJK & NAs



Telecom Sector share in GDP (%)

Years %age share of GDP

2000-01 1.6

2001-02 1.6

2002-03 1.7

2003-04 1.7

2004-05 1.9

2005-062.0

Foreign Direct Investment in Telecom Sector (US $ million)

Teledensity (Fixed + WLL + Mobile)

Years Total Teledensity (%)



2000-01 2.80

2001-02 3.66

2002-03 4.31

2003-04 6.25

2004-05 11.89

2005-06 26.26 2006-07 44.06

2007-08 58.90

2008-09 62.0

July-09 62.3

Aug-09 62.3

Sep-09 62.4

Oct-09 62.4

Telenor:Telenor acquired the license for providing GSM services in Pakistan in April 2004, and

had launched its services commercially in Islamabad, Rawalpindi and Karachi on 15

March 2005]], and on 23 March 2005, Telenor started its services in Lahore, Faisalabad

and Hyderabad. Telenor has its corporate headquarters in Islamabad, with regional

offices in Karachi and Lahore. On January 28, 2005, Telenor established its first call

centre in Lahore. Telenor is the 2nd largest network of Pakistan after Mobilink.

Mobilink:

Mobilink is the largest cellular service provider in Pakistan. Mobilink's corporate postpaid

package is sold under the brand name "Indigo" and prepaid by the name of "Jazz”.

Pakistan Mobile Communications Limited, better known as Mobilink GSM, is a

telecommunication service provider in Pakistan. According to PTA statistics, Mobilink

has 29.55 million customers by July 2009. Mobilink's Head office is located in Mobilink

House, 1 A Kohistan Road, and F-8 Markaz Islamabad

Ufone:

Ufone GSM is a Pakistani GSM cellular service provider. It is one of six GSM Mobile

companies in Pakistan and is a subsidiary of Pakistan Telecommunication Company. It

has a subscriber base of 20.05 million as of July 2009. It is currently owned by United

Arab Emirates based.



Zong:

ZONG is the first International brand of China Mobile being launched in Pakistan.The

company is often cited as China Mobile (Pakistan). ZONG is part of China Mobile

Pakistan (CMPak), which is a 100% subsidiary of China Mobile.

In 2004, Warid Telecom International LLC, purchased a license for operating a

nationwide mobile telephony network, (WLL) and long distance international (LDI) for

$291 million US dollars and was the first venture of Warid Telecom International LLC.

Warid:

Warid Pakistan launched its services in May 2005. Within 80 days of launch Warid

Pakistan claims to have attracted more than 1 million. users. According to Pakistan

Telecommunication Authority, currently Warid Telecom has 18.14 million subscribers as

of July 2009. It is ranked as the fourth largest operator in Pakistan. Warid Pakistan

claims it has the largest "post-paid" subscriber base in Pakistan.

On June 30, 2007, Singapore Telecommunications Limited (SingTel) and Warid

Telecom announced that they have entered into a definitive agreement subsequent to

which SingTel will acquire a 30 per cent equity stake in Warid Telecom for an estimated

$758 million — valuing the company at an enterprise value of $2.9 billion.



COMPANY WISE RANKING ON THE BASIS OF USERS

Mobilink 32,032,363 million users

Telenor 18,125,189 million users

Ufone 18,100,440 million users

Warid 15,489,858 million users

Zong 3,950,758 million users

Insta 321,204 million users

BUSINESS ENVIRONMENT RANKING

• Pakistan is the world’s largest unsaturated market for mobile phone users

• Ranks 11th among 15 top rated countries

• Telecom rating is 49.4%

• Telecom infrastructure is 39.3% established

• Telecom market is 33.5% risky for foreign investors

ECONOMICS OF TELECOM YEAR 2008-09

Investment Growth

Declined by 11%

FDI in Telecom :

Increased by 30%

Revenue Share :

Up to 65%



CITIES/ TOWNS/ VILLAGES COVERED:

PROBLEMS:

Fixed-line services still unavailable in several of Pakistan's more remote areas

Poor fixed-line infrastructure has a negative impact on the take-up of internet

and broadband usage

High levels of taxation and regulatory fees on operators, if unchecked, could

lead to a stunting of mobile growth

Network capacity, particularly in mobile market, could struggle to keep up with

demand Intense competition could have the effect of causing operators to enter into new

price wars, which could in turn cause a deterioration in service quality as

congestion of traffic becomes more common

Political instability could turn into economic uncertainty, which could moderate

future inward investment plans



REMEDIES:

Remote areas should be provided with the telecom services

An innovated infrastructure should be designed to support technological

advancements in the field of telecommunication

Taxes should be decreased

Formulate policies to avoid price wars

Create a politically stable environment in order to avoid economic uncertainty

Diffusion of New Ideas and Knowledge.

The flow of information plays an essential role in the diffusion of new technology and

ideas at the level of individual enterprises, the industrial sector and the national

economy. The importance of the new knowledge and new ideas as key elements for

stimulating growth rate has long been recognized by economists but is receiving more

attention in recent years among new growth theorists. The source of knowledge and new

ideas can be domestic or global. If knowledge is local, telecommunications technology

can be used to globalize that local knowledge and this process is known as localization,making a local idea global. In the case where information or an idea is made known in

various countries (and usually adopted in those countries), this process is known as

globalization. ICTs then make both localization and globalization possible. Modern

telecommunications provide a cost effective and time efficient medium for accessing

rapid development of computer and communication technology.

Reduction of Regional Infrastructure and Development Gap

One of the reasons for the persistent gap between rural and urban areas in any countryis the telecommunications infrastructure gap, which results in the information gap

between rural and urban areas. Rural areas have little or no telecommunications

infrastructure (e.g. in terms of telephones, facsimile/fax, computers, printers and the

Internet, except in telecasters or community phone shops where available), when

compared with the urban areas. This difference in telecommunications infrastructure is



called the digital divide. Telecommunications infrastructure should then be developed in

rural areas in order to reduce this digital divide, as Mbarika (2002) stated earlier in this

study unit.

If rural people obtain more information about agricultural prices, markets and economicopportunities beyond their geographical horizon they will be able to increase their

productivity. Availability of telecommunication services can help to improve information

flow between rural and urban regions and help reduce the gap of economic development

between developed and developing countries but here other factors such as cultural,

social and institutional factors can play important roles. Information between rural and

urban areas can only be transmitted if there are communication technology links

between these areas. Governments and other financially able parties, such as in the

private sector, should establish communication technology links to facilitate informationtransmission.

Telecommunications as an Input to the Economic Production

Process

Telecommunication services in any business entity are to some extent a low cost

substitute for information handling labor and have very low substitutability with other

traditional inputs such as capital, production, labor and materials (Nandi 2002).

However, telecommunication services help the industries more by increasing theproductivity of each of these traditional inputs and thus increasing the efficiency of the

entire production process. Telecommunications service is highly complementary with the

use of information technology products. Telecommunications help with the retrieval and

transportation of information, and allow efficient processing and exchange of information

among different computers situated in distant locations.

Market Efficiency Effect

By facilitating information flow and by enhancing the communication between buyersand sellers, telecommunications increases the efficiency of market operations. Nandi

(2002) mentions that when a telecommunication infrastructure exists, in equilibrium, idle

resources are lower and markets are more efficient than when it does not.

Telecommunications increase arbitrage opportunities in financial markets, which in turn

lower the capital costs of production.



Spill Over and Externality Effects

In addition to its direct contribution to end-users, the telecommunication networks and

their use generate significant spill over effects in other sectors of the economy. Once the

telecommunication infrastructure is built in any nation, it is available to all sectors of the

economy and has good public characteristics. By possessing the characteristics of

infrastructure capital, telecommunication networks generate substantial externalities

both on the supply side and on the demand side. Investments in telecommunication

infrastructure have effects similar to those of improved or increased innovation. Many of

the benefits of telecommunication investments are not appropriated by the telecom

sector, e.g. the lowering of transaction costs, the ability to search widely or the ability to

control a greater pan of production and organizational activities. Telecommunications

lower the fixed and variable costs of information acquisition and an expansion of

telecommunications generates cost saving externalities in other markets (Nandi 2002)

The externalities involve lower search costs, increased arbitrage abilities and more

information on the distribution of prices and services. Because of these spillovers and

externality effects, the social rate of return on telecommunications is expected to be

much higher than its return just on the telecommunications investment itself. Studies

done by the United Nations Economic Commission for Europe, by the ITU, by the World

Bank, recognize the role of telecommunications in stimulating efficiency and growth of

other sectors in the economy.

Coordination of Economic Activity

By allowing easy acquisition and transfer of information among economic units, and by

facilitating rapid two-way communications over distance, telecommunications help in the

coordination of economic activity (Nandi 2002). In business, this mechanism improves

the capability of managers to communicate with each other and helps them to make

better decisions and business plans. Telecommunications help to remove, to a great

extent, the physical constraint on organizational communications in all sectors of the

economy. Recently, telecommunications has become a primary contributing factor



towards the development of increasingly complex large organizations and globalization

of different corporations.

The efficiency of household operations also improves as telecommunications allow

better coordination of their different activities. At the aggregate economy level,telecommunications helps social planners to coordinate different economic activities at

reduced communications costs. However, it is very difficult to quantify the benefits to

management and coordination activities as they affect the quality of managerial and

administrative decision-making, which in turn improves economic performance.

Global Telecommunication Connections

As is true for domestic telecommunications, global telecommunications can influence the

global economy through similar mechanisms. Telecommunications helps the rapid

movement of information from one country to another and allow optimal utilization of

available technology, products and services around the world, thus helping to improve

the global economy. International telecommunication networks can improve the global

economy in many other ways. The speed of transmission of technological knowledge

and other information depends on the quality of information connecting channels among

different countries and the degree of absorption capacity of different countries.

Modern telecommunication helps the coordination of different countries and increases

the division of labor at the global level. International communications also increase the

opportunities for many small potential traders in different countries and increase the

efficiency of international capital markets. However, the expansion of global

telecommunications can benefit different countries very unevenly due to their differences

in political and economic powers as well as the differences in social and cultural

backgrounds.

Rural and Urban Development

It is an established fact that there is a large gap and income between the most advanced

countries and the developing countries in the world. However, the discrepancy in output,

income and standard of living among different regions is more acute domestically in less

developed countries than between developed and developing countries. In many rural

communities, the middleman plays a key role as sole buyer of products, monopoly



supplier of manufactured goods and credit suppliers to farmers. This middleman, in

superior market information. The free flow of information between rural and urban

markets can inform rural suppliers of the demand and prices of their products and

services in different markets throughout the economy.

This will allow them to adopt an optimal production and pricing plan for their products.

Using telecommunications, rural agents can consult with agronomists and vegetarians in

distant locations to provide necessary information to farmers for improving their crop

yields and livestock productions. All these activities help the rural people to increase

their productivity and income. The availability of telecommunications in rural areas can

come from major urban areas, creating more jobs opportunities and income in rural

areas. Thus, the development of rural telecommunications can help to overcome many

obstacles to rural development.



References:

www.google.com

www.pta.com

www.telenor.com

www.zong.com

www.ufone.com

www.warid.com

http://www.google.com/

http://www.pta.com/

http://www.telenor.com/

http://www.zong.com/

http://www.ufone.com/

http://www.warid.com/

http://www.google.com/

http://www.pta.com/

http://www.telenor.com/

http://www.zong.com/

http://www.ufone.com/

http://www.warid.com/

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