The telecommunications industry in Pakistan: growth, challenges and opportunities

Sahar Iqbal

Akhund Forbes, Karachi

sahar.iqbal@akhundforbes.com

Industry overview

Four main cellular companies presently operate in Pakistan, with a customer base of over 195 million, up from 188 million last year. The private sector has played an important role in expanding and developing telecommunications (‘telecoms’) services such as cellular phones, card payphones, internet/broadband and fixed-line telephones. This growth is aided by Pakistan's sophisticated telecoms infrastructure, which includes microwave radio relay, coaxial cable, fiber-optic cable, cellular and satellite networks. Furthermore, ten international submarine cable systems – SMW3, SMW4, SMW5, IMEWE, AAE-1, TW1, PEACE, 2AFRICA and AFRICA1 – link Pakistan to Asia, the Middle East, Europe and Africa, increasing global connectivity.

Teledensity and market trends

Pakistan's teledensity has dropped to 83.2 per cent at the end of the 2023 financial year, down from 85 per cent in the 2022 financial year, with the cellular mobile segment accounting for the majority of the fall. This marginal drop highlights the need for additional investment and governmental support to maintain and expand the telecommunications infrastructure.
The market for imported telecommunications equipment, including handsets, is expected to be $700m. Chinese telecoms infrastructure providers such as ZTE and Huawei have extensive operations in Pakistan, where they design, build, install, configure and maintain telecoms systems. Other major vendors are Advance Digital, GD Satcom, iDirect, Comtech EF Data, NEC Corporation, Conexant Systems, Agere Systems and Emerson Process.

Leading sub-sectors

Several sub-sectors within Pakistan's telecoms industry offer significant growth potential, with each playing an important part in the sector's expansion and modernisation.

Telecoms switches are critical for controlling telecoms networks. As data traffic grows, there is a greater need for modern switches that can handle larger volumes while also maintaining effective network management.

Radio communication links are crucial, especially in isolated places where fibre optics may not

be available. These lines provide dependable service, allowing even the most remote places to connect. The need for fibre-optic cables has also increased as broadband services continue to expand. These cables provide high-speed, high-capacity data transfer, making them essential components of modern telecoms infrastructure.

Tower-sharing services are becoming increasingly popular among telecoms carriers as a cost- and resource-saving measure. Sharing infrastructure allows businesses to save money and enhance efficiency, making it an appealing choice for increasing network coverage. Broadband services are also a crucial area for investment, given the expansion of internet-based services and the growing need for high-speed internet. Expanding broadband access is critical for promoting economic growth and satisfying the connectivity needs of businesses and consumers.
Lastly, backup power for telecoms towers is critical to ensuring uninterrupted operation, particularly in places with variable power supplies. Reliable power sources for telecom towers are required to ensure continuous operation and service reliability, especially in areas prone to power outages.

Opportunities and government initiatives

The Device Identification, Registration and Blocking System (DIRBS) adoption is a big step forward in Pakistan's telecoms sector. This open-source solution addresses the harmful effects of the grey market for mobile devices by verifying that all devices in use are legally imported or locally produced. The successful implementation of DIRBS has resulted in an increase in legal imports and local manufacturing of mobile devices. The government's dedication to promote local manufacturing and attracting multinational corporations to establish plants in Pakistan has resulted in a level playing field for all mobile industry participants. This programme strives to increase domestic production, minimise reliance on imports and create job opportunities within the country.

Challenges

Despite the progress, Pakistan's telecoms industry faces numerous hurdles. Policy-based and operational concerns have hampered the flow of significant investments required for further development. Regulatory barriers, inconsistent rules and bureaucratic inefficiency make for a difficult business environment for both domestic and foreign businesses. Additionally, upgrading and expanding the existing infrastructure is vital. Outdated transmission infrastructure, insufficient power supply for telecoms towers and the need for wider internet coverage continue to be key impediments to industry expansion.

Conclusion

Pakistan's telecoms industry is expected to grow further, fueled by rising connectivity demand and government measures aimed at improving infrastructure and boosting local manufacturing. Key opportunities in telecoms switches, radio communication lines, fibre optic cables and internet services demonstrate the sector's potential. However, addressing policy and operational difficulties is critical to attracting sufficient investments and ensuring long-term development. Pakistan can capitalise on growth prospects in its telecommunications sector by creating a favourable regulatory framework and investing in modern infrastructure, thereby spurring economic development and improving connectivity for its citizens.