Growth in Telecom Industry Has Come to a Standstill: Telecom Industry Breaking into Cold Sweats :
Over the past two years, the market has become accustomed to the fact that growth in telecom industry has come to a standstill.
This near-saturation level is due to slow mobile density growth amid declining fixed line usage.
Total density reached 64.2 percent in October from 64.1 percent at the start of the current fiscal year. Mobile subscribers’ base grew by 1.5 percent during the first four months of the current fiscal year to 100.7 million subscribers in October.
With mobile operators finding it difficult to increase mobile density, the quest to retain market share has brought all telecom operators on a warpath with each other, causing substantial damage to the fixed landline business in Pakistan.
The main felon behind declining land line users is low mobile tariff rate. In the past five years, the industry has lost 1.8 million fixed land line users, nearly one third of the total..
Declining fixed landline subscriber base is a major concern for the PTCL – which serves nearly 95 percent of the fixed line market – since it has been paring down its profitability.
This can be gauged from the fact that PTCL’s revenue squeezed to Rs57 billion in 2010 from Rs87 billion in 2005. At the same time, its net profit margin fell to 16 percent from 30 percent in 2005. Therefore, to retain its customer base, PTCL has been using aggressive marketing tactics and introducing catchy packages akin to mobile operators.
As telecom operators seemed to have maximized the medium-term potential of the voice business, they are eyeing other value-added segments, primarily broadband, to protect their earnings.
At present, the PTCL holds a dominant position, capturing 53 percent market share (both of its DSL and EvDO) with a 0.47 million subscriber base. The second and third slot has been taken by Wateen and WorldCall, respectively, as per the PTA Annual Report 2009-10
With market penetration standing at 0.5 percent, there is exorbitant growth potential in the broadband segment that has shown an average annual growth of 150 percent during the past three years. But the expansion in broadband technology hinges on other prime factors such as availability of personal computers, literacy rate and affordability.