Telecom sector greets FY2011 with hefty $15m FDI

Foreign Direct Investment (FDI) inflows for the telecommunication sector stood at $15 million in July.

M Yasir August 19, 2011

Foreign Direct Investment (FDI) inflows for the telecommunication sector stood at $15 million in the first month of the current fiscal year 2011-12 (July), State Bank of Pakistan (SBP) reported.

The telecom sector’s share for FDI remained second highest after oil and gas sector, which received a total of $29.8 million in the month of July.

The month of July 2011 has shown a 14,800% growth as compared to a mere $0.1 million in the same month during the last fiscal year.

Analysts predicted that FDI in the telecom sector is likely to rebound its growth in the coming years, the way it recorded huge investment inflow during recent years owing to development and advancement in the cellular phone and broadband sectors.

During the period 2005-08, the telecom sector attracted $5.086 billion in the country which is considered to be the boom period of the industry as cellular and wireless operators continued to invest large amounts of capital on infrastructure expansion, maintenance and marketing.

In 2005-06, the telecom sector FDI recorded $ 1.905 billion, which is the highest share of 54% in the overall FDI.

Value added services such as 3G and Mobile-Banking will be major areas for telecom operators, banks and content service providers to invest millions of dollars in to launch the technologies in Pakistan.

The broadband sector has the potential to attract million dollar investments in the upcoming months due to massive expansion of the service network and physical infrastructure in the untapped market.

Moreover, FDI may land through various potential sectors including LDI operators, MVNO, class value service providers such as vehicle trackers, satellite and wireless communication services.

The FDI in the telecom sector fell by 79 percent in the closing financial year 2010-11. The overall telecom sector including LDI, cellular, broadband and various class value-added service providers have brought $79.1 million FDI in the closing fiscal year 2010-11 as compared to $374 million in the previous fiscal year 2009-10.

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