Telecom: Grey traffic chips at LDI traffic

International traffic falls 11% YoY in February 2014.

KARACHI: As cheaper telephony channels such as grey traffic and Voice over Internet Protocol (VoIP) services terminate more international calls to Pakistan, the telephony traffic of Long Distance International (LDI) operators declined further, Topline Securities reported on Wednesday.

“As per our industry sources, international incoming call traffic of LDI operators has declined to 520 million minutes in February 2014, down 4% month-on-month and 11% year-on-year,” the brokerage house said in its report. LDI operators received an average 557 million minutes a month in 2013, according to the report.

The analyst report attributed the aforementioned fall in LDI minutes to a gradual traffic shift in incoming international calls to grey traffic and VoIP services following the establishment of the International Clearing House (ICH) agreement.



A cartel of 14 LDI operators, the ICH was established on October 1, 2012. Under this agreement, all incoming international traffic had to be handled through a centralised gateway, which was supposed to be operated and maintained by Pakistan Telecommunication Company Limited (PTCL) and the LDI operators were to share the revenues based on their respective market shares with fixed termination charges.

Giving the breakdown of international calls landing in the country, the report said that of the 520 million minutes in February 2014, the ICH setup catered 485 million minutes while Telenor Pakistan’s LDI business – which exited ICH setting this January – routed 35 million minutes.

“In the first two months of 2014, international traffic dropped to 1.1 billion minutes, which is 14% lower than 1.2 billion minutes in the corresponding period last year,” the report said.

Given that PTCL is the major stakeholder in the ICH with a 50% share, the analyst report said the declining trend is bad for the company. PTCL nearly doubled its after-tax profits to Rs15.7 billion on the back of higher revenues from its LDI business in financial year 2013. The profits were mainly driven by an 11% year-on-year jump in PTCL’s revenues largely due to higher rates for international incoming calls, according to market analysts.

To curb the menace of grey traffic, which is causing the national exchequer losses of over Rs3.5 billion a year, Pakistan Telecommunication Authority (PTA) has already equipped itself with a more efficient system to identify international calls illegally terminated by the country’s gateway exchanges.

Published in The Express Tribune, March 6^th, 2014.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.