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“Spectrum auction done: What’s next?”

Syed Ismail Shah, PhD

Chairman, Pakistan Telecom Authority

E-mail: ismail@pta.gov.pk

Create a fair regulatory regime to promote investment, encourage competition, protect consumer interest and ensure high quality ICT services.

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Highlights of Telecom Industry in Pakistan

SOURCE: PTA Data

Mobile subscriber base evolution (# of SIMs, mln)

63.2

94.3 108.9

136.5

-

20

40

60

80

100

120

140

2006-2007 2008-2009 2010-2011 2012-2013

Mil

lio

ns

Key Cellular Mobile Indicators

Cellular Subscribers (as of March 2014): 136.5 million (SIM connections based on 90 days active)

Cellular Teledensity (as of March 2014): 74.9%

Annual Cellular Revenues (FY2012-13): Rs. 311 billion

A subscriber holds 2.6 SIMs on average

Market is mainly prepaid oriented (~98%)

Smartphone penetration is about 10%

Data / VAS potential is almost entirely

unexploited with ~10% share in total revenues

Fixed telcom market is limited and this represents an important potential for mobile broadband

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Auction Date: April 23, 2014: 4 Operators won Spectrum in the 2100 and 1800 MHz bands

• ZONG won spectrum both in 2100 and 1800 MHz bands

• Mobilink won 10 MHz in 2100 band

• Ufone won 5 MHz only in 2100

• Telenor won 5 MHz in 2100

SOURCE: PTA Data

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Strong DEMAND expected for 3G/ 4G exists in Pakistan

• 3G/4G enables users to download more content than 2G in the same amount of time. This makes data-intensive, on-the-go downloads such as music or high-definition video streaming a reality.

Higher user speeds needed

• 3G/4G requires less time to connect than its predecessor GPRS/EDGE (2G), assuring an “always-on” service experience.

Faster connection times

• 3G/4G will offer reduction in round-trip latency compared to GPRS/EDGE, making real-time applications such as VoIP, video calls, and online gaming possible.

Less round-trip latency

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What’s Next?

• PTA envision affordable and broad based communications access to the consumer irrespective of their

location in the country

• Collaborative framework shall be supported by availability of additional spectrum, spectrum harmonization, spectrum re-organization, spectrum sharing, infrastructure sharing and other such regulatory interventions and facilitations

• Adoption of HSPA+ and LTE in 2014, substantial HSPA+, LTE & LTE Advanced deployment before

2020

• Pakistan due to its strategic location can play a very pivotal role in becoming a main transit point for all

kinds of regional traffic in addition to its own increasing requirement

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Develop a smarter society by encouraging growth in broadband infrastructure deployment, provision of

affordable access and quality of broadband

services across Pakistan on the basis of equitable

opportunities and promotion of competition in

the sector through fair regulatory regime

Facilitate the normal functioning of

competition in the mobile sector rather than over-

regulating it

Establish a level playing field so that fairness and transparency is ensured

in licensing and competition

Additional availability of spectrum in harmonized

bands to be made available for meeting industry demands to

deliver the full benefit of mobile broadband service

to consumers

SOURCE: PTA Data

What’s Next?

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Areas of Focus

Connected Communities

Enabling Technologies

Educating Consumer on

NGMS QoS

Supporting Regulations

Rollout Monitoring

• Opportunity for public and private sectors to

capitalize on this development in order to further

promote the progress in all sectors

• PTA will facilitate in creating an environment

with faster and widely available mobile

broadband services across the country

• Strong QoS monitoring to ensure high quality

services for consumer

• E/M-services in the areas of

Education,

Governance,

Health,

Agriculture

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PTA to encourage mobile infrastructure sharing through voluntary cooperation between licensed operators and also facilitating third party business

PTA to supports mobile operators transition to newer technologies and service

Respond proactively against cyber theft & crimes to build consumer trust in online services that shall also effect uptake in the long run

To administer a 'co-regulatory' scheme to address community concerns about offensive and illegal material online

Content licensing & Monitoring reform will be introduced to enable new business models for rights holders and commercial users to provide attractive content offers for consumers

Attention will be directed to extend broadband coverage across Pakistani remote areas

Supportive Regulations

SOURCE: PTA Data

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Required Strategic Role in making 3G/4G adoption a success in Pakistan

Right Pricing

Benefits of 3G/4G (e.g. speed, latency) should be leveraged to

introduce QoS differentiation and achieve price uplift vs. 2G mobile

offerings. Market share can be increased through faster availability

next generation mobile services.

Educating the Customer

The advantages of 3G/4G should be clearly communicated so that

customers understand the benefits vs. 2G technology and to

incentivize migration from 2G to 3G/4G

Service Offerings

Availability of Broadband is not an end in itself and should be used

to offer different services according to the needs of the people.

Key strategic actions to seize the 3G/4G opportunity

Expected Results:

A faster rollout of 3G/4G networks that

will give operators a chance to define the

market trends to their advantage

Faster go-to-the market strategies to

ensure massive investments payoff.

Development of useful

applications/services increasing

customer’s loyalty

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Expected GDP Trend of Pakistan

SOURCE: Plum Report 2013

Rs 297 million in

additional GDP

growth in 2018

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Market (Revenue): World-wide Trend

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Access to Mobile Broadband communications

3G/4G will provide the ability to communicate to those sectors of the community typically underserved by fixed line

broadband technology. By achieving high population coverage and improved affordability through low prices.

Social impacts

Economic migration, from rural to urban areas and even overseas has led to dispersion of family members. Mobile

broadband services are facilitating regular communication and also allowing for wealth transfer, for example through

mobile remittances. Broadband mobile services also provide a structure for the wider sharing of Internet access in

developing countries.

Productivity

Mobile broadband services allow businesses to both develop and prosper through the provision of timely information

and communications on the move. Positive efficiency effects will be seen in different sectors e.g. education, medical

services, agriculture etc.

Digitization Impact on Pakistan

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Impact of 3G/4G on E-Governance

Providing government

services electronically

Elimination of corruption

Improving efficiency of government

services

Online Government procurement information

E-Governance

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Impact of 3G/4G on E-Education

Computer based education at the school level

Computer centre at every union

Broad based computer literacy

Distance learning services via mobile broadband

Specialized IT Training centre and vocational institutes

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Impact of 3G/4G on IT Industry

Further Develop domestic IT Industry

Enabling environment for IT based skill

development

Encourage development of IT based incubation centres in remote

areas

IT Park possibilities in Remote areas

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Health services

M-Business

Public information

E-Health

Internet

e-Governance

M-banking

IT Park

IT Outsource

Infrastructure

e-Administration

IT Industry

3G/4G can bring a change towards a more connected society

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Conclusion

1

7

High-speed mobile broadband networks have become integral to daily life. As one of the few general-purpose technologies, broadband is becoming

increasingly pervasive, continually improving and catalyzing new inventions and innovations

With availability of 3G/4G services possibility of creating digital markets and boosting digitization can yield significant economic benefits and lead to

substantial social benefits to societies and communities.

Digitization has the potential to boost productivity, create new jobs, and enhance the quality of life for society at large scale

As technology develop, mobile services have the potential to impact economic activity through the provision of high value 3G and 4G data services accessed

via smartphones, tablets and dongles that deliver mobile data services to businesses and consumer

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THANK YOU

E-mail: ismail@pta.gov.pk

Create a fair regulatory regime to promote investment, encourage competition, protect consumer interest and ensure high quality ICT services.

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Back Up

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Projected Broadband growth in Pakistan with 3G/4G Introduction

3G could result in additional GDP value (net present

value terms) between PKR 380 billion and PKR 1,180

billion up to 2020.

The government can generate around PKR 23 billion

to 70 billion additional tax revenue (the amount

depends upon the technology penetration

scenarios)

Digitization for Economic Growth & Job Creation: the

mass adoption of connected digital services by

consumers, enterprises, and governments— as a key

economic driver that accelerates growth and

facilitates job creation.

Plum Report

SOURCE: Plum Report

44 million

BB users by

2018

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Digitization Impact on Economy (Ecosystem Perspective)

SOURCE: Booz & Company

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GDP growth Impact on other countries market from 3G penetration

2

2

In Indonesia where average penetration of 3G services was 10% over 2008-2011, 10 more 3G

connections per 100 connections would have increased the GDP per capita growth rate by 1.5%

In Turkey where average penetration of 3G services was 25% over 2008-2011, 10 more 3G connections

per 100 connections would have generated an additional growth in GDP per capita growth rate by0.6%

In USA where average 3G penetration was 42% over 2008-2011, 10 more 3G connection per 100

connections ( a 24% increase from actual 3G penetration level of 42%) would have increased GDP per capita

growth rate by 0.4%

SOURCE: Deloitte Report

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Pakistan : An Overview

SOURCE: Team analysis

Key Stats

Pakistan

▪ Income /Capita US $1300 ▪ Literacy Rate 53% ▪ Media Age 21.2 ▪ Geo-strategic Location ▪ Population and workforce

Land Area 796,095 km2 • 36th Largest Area

Population, mil 190 (6th Largest Population)

• Pakistan has the 6th largest population in the world, making it

an attractive market for global investors

• The country is expected to have more than 230 mln

inhabitants by 2030 with ~2% per anum growth

• Its population is young and becoming more educated

• Urbanization trend is expected to continue, reaching a level

of 45% by 2030

• It is expected that by 2050, Pakistan will be the 31st largest

economy in world with nominal GDP of 675 bln USD from its

current state of ~240 bln USD (43rd largest economy as of

2013)

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Telecom Overview: Well defined Policy , Regulatory and Industry Structure

Min of IT & Telecom

Pakistan Telecom Authority

PTCL, NTC, SCO

Frequency Allocation Board

PRIVATE OPERATORS

FREQUENCY ASSIGNMENT

POLICY DECISIONS

CELLULAR, WLL, DATA & LDI

BASIC VOICE & VAS

REGULATORY FUNCTIONS

PSEB IT & SOFTWARE PROMOTION

USF/R&D Fund TELECOM DEVELOPMENT & R&D

SOURCE: PTA Data

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Broadband Penetration in Pakistan (A shift towards Mobile Broadband seen since 2012 )

56.0

44.0 2012

Fixed (DSL, HFC,FTTH) Wireless(WiMAX,EvDO)

41.0

59.0

2013

Fixed (DSL, HFC,FTTH) Wireless(WiMAX,EvDO)

70.9

10.3

6.6

7.3 2.7 2.2

2013

PTCL

Wateen

WorldCall

WiTribe

Qubee

Others

60.1 14.2

8.6

9.4 3.5 4.2

2012

PTCL

Wateen

WorldCall

WiTribe

Qubee

Others

Conclusion

• Strong need of faster Mobile Broadband services

• Spectrum Auction and introduction of faster mobile data services will trigger a Technological growth

• Companies will be able to capitalize from revenue generation from Data

• High un-met demand for faster mobile services

Broadband Technology Share Broadband Operators Market Share

SOURCE: PTA Data

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Potential of Next Generation Services in Pakistan

Data Revenues of Telecom Sector: Data revenue share is increasing

Local Loop Operators (FLL & WLL)

Cellular Operators: Industry yet to capitalize on Data revenue stream due to technology limitations

Rapid growth in Mobile broadband & traffic

SOURCE: PTA Data