Telecoms, internet in Pakistan

Staff turnover, salary inflation. Si3 is Pakistans leading IT Integrator, but is having a hard time keeping its people happy. CEO Amer Hashmi, in usual visionary mode, has decided to move all backend work out of the Karachi head office to, of all places, Multan. He now has 10 acres and a plan to build a full fledged campus with office, NOC, residential, training, educational and recreational facilities.

Transmission of TV over IP is regulated by PEMRA and the page to see is here.


Duration of Licence:
5 YEARS

Annual Renewal Fee:
30% of the licence fees Plus 5% of the AGR.


Of course PTCL has 1700Mbps of unused (spare, hoarded, unsold) bandwidth coming in off FLAG and the SE-ME-WEs. Reducing the wholesale price would mean using this, surely that way lies madness…..

PTA is still focussing on buying bandwidth when the time has come to start creating bandwidth. ISPs should be made to interconnect, much in the same way that phone companies are. That way more revenue is earned by Pakistani companies, we are likely to have hosting startup here, more jobs for IT graduates…. Interconnects mean free bandwidth for ISps. But who wants free bandwidth? More madness…..

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PTCL denies bandwidth rate cut

By Imran Ayub

KARACHI: Pakistan Telecommunication Company has denied rate cut for its international bandwidth service despite announcement in June 2006, as the privatised entity reveals in a plea it has not received any circular from an international consortium, which operates undersea fibre cable link.

Sources in telecom said local companies including Internet service providers and other telecom service operators recently approached the PTCL about non-implementation of its June 2006 orders, which had cost them more than $5 million in six months, the concerned department denied to charge reduced tariff, saying the international consortium FLAG (Fibre Link Around Globe) has not issued any notification about tariff revision.

“It is to inform you that we have no written evidence circular from our tariff department regarding the revision of tariff for IP transit FLAG VPOP connectivity,” a source quoted a letter from the PTCL’s international revenue department when it was questioned over higher tariff by one of the local operators.

“Therefore we can not bill customers on reduced tariffs without objective evidence,” added the PTCL letter.

The sources said the ISPs and other telecom service providers were making regular payments in accordance with the reduced tariff for international bandwidth but in a surprise move they started receiving arrears for the monthly advanced bills against IP transit and FLAG services.

“The ISPs and other companies later approached the PTCL but instead any positive any response the PTCL started issuing notices for payments without furnishing the reasons of accumulated arrears as against the regular release of timely payments,” said the source privy to the PTCL and ISPs negotiations.

The PTCL in June last announced to cut international bandwidth rate from $76,000 per two megabits a month to $60,000 as a first move after the Etisalat took over the management control after the company’s privatisation.

The decision attracted appreciation from the local telecom industry as the announcement also included tariff cut of FLAG services. However, now the telecom operators say they have started receiving bills with arrears that defines their previous bill payment, which were paid in line with the reduced tariff rates.

“To avoid dislocation of our services the international revenue PTCL was again approached with the request dated to provide the details or reasons of accumulated arrears,” said one of the operators, who wished not to be named.

“Finally we received a communiquÈ from the PTCL which says they have no written evidence from the FLAG to offer reduced tariff.”

He questioned the PTCL claims and said the FLAG Telecom representative had already officially communicated their agreement for the reduced same prices.

“The PTA (Pakistan Telecommunication Authority) has already showed concern over the PTCL tariff rate and the recent approach of the company would hit the industry interest, which is already bearing higher cost of doing business in Pakistan,” he added.

“In the best interest of supporting broadband services in the country the PTCL high ups and the regulator itself should intervene and issue directives to the department concerned for implementation of long pending reduced tariff effective June 2006.”

As MNP is set to launch in Pakistan any month now here is an interesting Economist article about what happened in Japan. Summary: prices didn’t go down but customers got more and better services.

This is quite interesting because Paktel is the first International company bought by China Mobile, the world’s biggest wireless carrier by market capitalisation.

other links:
Xinhua
Financial Express, India
Light Reading
Reuters

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China Mobile takes control of Paktel

The News, KARACHI: China Mobile is set to enter into Pakistan’s cellular industry, as the Asian telecom giant has reached a $284 million deal with the Luxembourg-based Millicom International to acquire its operations in Pakistan Paktel, one of the six cellular operators in the country.

Sources in telecom said the Millicom International, which operated both AMPS and GSM cellular services through Paktel in Pakistan had formally announced the deal to finally wrap up its more than 15-year operations in the country.

“Millicom International has signed an agreement for the sale of 88.86 per cent shareholding, in Paktel Ltd to China Mobile Communications Corporation,” said a Millicom International statement.

“The transaction implies an enterprise valuation for Paktel Ltd of $460 million. The total cash consideration payable to Millicom as a result of the transaction (including the repayment of inter-company debt) is approximately $284 million.”

It said the completion of the transaction is subject to certain regulatory approvals and procedures and if such requirements were met, conclusion of the deal was expected to occur in late February 2007.

“Now the two parties would formally approach the telecom authorities in Pakistan to get a nod over the deal,” said a source close to the Millicom’s operations in Pakistan. The Millicom authorities in November 2005 announced that they were discussing the sale of one of its Pakistani units.

The same month Millicom, reported earnings before tax, depreciation and amortisation of $110.8 million, below the $117.6 million of the same period of 2004 and its shares were 3.09 per cent higher at 150 crowns after the figures.

In January 2006, Millicom International said following high number of unsolicited approaches its board of directors decided to conduct a review of strategic options for the company and appointed Morgan Stanley as financial adviser.

“With the sale of Paktel, Millicom telecom operation in Pakistan started in 1990 has become a history as it has already sold out its shares in Instaphone to local partners,” said the source. He said China Mobile was very much interested in Pakistani cellular market and also attempted to get a GSM licence in an open auction in 2003,” he added.

With more than 250 million wireless customer accounts as of last month, China Mobile is by far the world’s biggest wireless carrier and controls about two-thirds of the mobile market in China. “The move may trigger new kind of competition in the merging telecom markets including, Pakistan,” said the source.

“China Mobile has built one of the most extensive national cellular networks in the world, covering all of mainland China and the company’s strategy clearly shows that its target market is Asia and other emerging telecom markets.”

He said though Millicom’s Pakistan operations was not in a very attractive position, still the country offered one of the best business opportunities to telecom operators, as its most of the rural areas were without basic telecom facilities.

“By December 2006, Paktel enjoyed 1.3 million, which ranked the company at fifth in terms of market share among six cellular operators with total 48.50 million cell phone users across the country,” added the source. He said for China Mobile, Pakistan was among emerging markets, which represented a particularly attractive destination for telecom companies as western markets become saturated.

“In many developing nations, including the fixed-line infrastructure is poor and limited in its range, so cellular networks, which are cheaper to roll out than traditional lines, are used as the primary means of communication,” added the source.