Remote work, online education drive broadband growth in Pakistan

With remote working and online education becoming a norm since the imposition of Covid-19-induced lockdown in March 2020, there has been a surge in 4G consumption whereas 3G demand has continued to decline.

According to latest statistics released by the Pakistan Telecommunication Authority, the number of overall mobile phone subscribers grew from 167.27 million in June 2020 to 168.04 million by the end of July 2020.

Similarly, the number of mobile broadband (3G and 4G) subscribers expanded from 81.14 million to 82.76 million in the same period, registering an increase of 1.62 million.

In terms of 4G market share, Jazz has the largest customer base of 19.98 million, followed by Zong at 18.13 million, Telenor 11.58 million and Ufone 4.22 million.

Public and economic policy analyst Hasaan Khawar believes the generational shift to mobile broadband networks will gain further momentum with improved coverage of higher-speed networks, rationalised tax regime for cellphone use and execution of schemes under the Digital Pakistan initiative.

At present, a significant number of mobile phone users in Pakistan have basic, voice-only devices because of high taxes including customs duty, sales tax and other levies, putting higher-end handsets beyond the reach of many citizens.

The biggest barrier to the provision of internet connectivity to the lower-income segments of society remains the affordability of smartphones.

Sharing his perspective of industry trends in Pakistan, Jazz CCO Asif Aziz told The Express Tribune that growing data demand from customers was leading to faster adoption of 4G compared to its predecessor 3G.

In partnership with the Universal Service Fund, created by the government to extend telecom services to the un-served and underserved areas, he revealed that Jazz was initiating projects to provide high-speed internet to the underserved areas. Lately, a contract has been awarded for providing internet connections to over two million citizens residing in Ghotki, Sukkur and Khairpur districts.

Talking about the challenges his company faced during the Covid-19 pandemic, Aziz disclosed that Jazz suffered a 7.9% decline in revenue in the last quarter of FY20 as compared to the corresponding period of FY19, mainly due to lockdowns, currency headwinds and the impact of tax changes.

“Excluding the tax changes, the revenue would have increased by 0.5% year-on-year despite the challenges posed by the pandemic during the quarter,” he emphasised.

Responding to a question, the company official said Jazz was working towards a digitally progressive and inclusive Pakistan by improving digital infrastructure, enhancing connectivity, investing in digital skills and literacy, providing mobile financial services to the unbanked population, and promoting entrepreneurship and innovation.

According to a GSMA report published recently, Pakistan’s telecom operators invested $5.3 billion between 2010 and 2018, but average capital expenditure (capex) as a proportion of revenue was below 23%. In other middle-income countries, the ratio was comparatively higher as Uzbekistan had a ratio of 36%, Iran 31% and Sri Lanka 27%.

The report suggests if Pakistan wants to forge ahead and build the digital momentum, appropriate policy decisions are needed, especially with regard to spectrum pricing to embolden operator investment and ensure the country does not fall behind regional leaders in rolling out next-generation networks.