Telenor is the second largest mobile operator in Pakistan.
Updated: August 2013
Telenor Pakistan is a wholly-owned subsidiary of Telenor. On 26 May 2004, Telenor was awarded a GSM licence to build and operate a mobile network in Pakistan. On 15 March 2005, a full multimedia platform for commercial mobile services was launched under the name of Telenor Pakistan. Telenor Pakistan owns 51% of Tameer Micro Finance Bank. As at 31 March 2012, Telenor Pakistan had 30.8 million mobile subscriptions. As at 31 March 2013, the mobile penetration (SIM cards) and number of inhabitants in Pakistan were 67% and 183 million, respectively.
Network and licences
Telenor Pakistan currently holds a nationwide GSM 900 MHz/1800 MHz licence (excluding Azad Jammu and Kashmir (AJK) and the Northern Areas). This licence was awarded in May 2004 for USD 291 million. In June 2006, Telenor Pakistan was awarded a GSM 900 MHz /1800 MHz licence to build and operate a mobile network in AJK and the Northern Areas for USD 10 million. Both licences are valid for a 15 year period. Telenor Pakistan met its roll-out obligations under both licences during January 2007 and March 2007, respectively. In addition to the two GSM licences.
Telenor Pakistan holds a Long Distance and International licence through which it is providing nationwide and international call services. The licence expires in 2024. Since its inception, Telenor Pakistan has rolled out its GSM network at a steady pace and has become one of the fastest growing mobile networks in Pakistan based on its coverage and capacity. The network is currently GPRS and EDGE enabled. A network modernisation project was launched in early 2012 to upgrade the network to 3G and 4G capability.
The State Bank of Pakistan issued branchless banking regulations which envisage a bank-led model for mobile banking in Pakistan. In response, Telenor Pakistan worked to acquire a bank and was successful in acquiring a 51% share in Tameer Micro Finance Bank.
In October 2009 Telenor Pakistan and Tameer Micro Finance Bank launched Easypaisa, a portfolio of mobile financial services. The vision of Easypaisa is to serve as a vehicle for financial inclusion for under-served households in Pakistan that have limited access to banking services. Customers can benefit from Easypaisa services in two ways: over-the-counter products, where certified merchants are used for financial transactions; and mobile products, where a customer uses his own mobile handset to undertake financial transactions. Currently, customers can, amongst other things, pay utility bills, send/receive money, donate to charities, top-up their prepaid mobile connection, pay for air tickets and receive their pension via Easypaisa; whilst corporate organisations can set up a mode of payment collection from their customers. Easypaisa was labelled as the third largest mobile money service in the world in the year 2012 by the World Bank. Currently, Easypaisa’s network is responsible for more than 100 million transactions [per year], which are carried out through 20,000 shops across the country.
As at 31 March 2013, Telenor Pakistan had a market share of approximately 25.2%, which is second only to Mobilink (with a market share of 29.8%). In addition to Telenor Pakistan and Mobilink, there are three other mobile operators in Pakistan: Ufone, Warid and Zong. Based on numbers produced by the Pakistan Telecommunication Authority (the PTA) as at 31 March 2013, Ufone had a market share of approximately 19.3%, Zong had a market share of approximately 15.5%, and Warid had a market share of approximately 10.4%.
The PTA has broad regulatory power including power to grant licences, regulate market conditions, including the price of interconnection, and monitor and enforce the licence conditions pursuant to the Federal Government’s telecommunication policy. The Frequency Allocation Board, a separate entity under the administrative control of the PTA, manages radio frequencies.
Certain regulatory issues are stated below:
- The PTA issued an information memorandum in January 2012 for a 3G licence auction in Pakistan. The 3G licence auction was due to take place on 29 March 2012. It is believed that due to the PTA failing to hire an independent consultant, the auction process was delayed. The government/PTA re-started their efforts after posting a request for consultants to participate in an independent advisory group and hired three individual consultants. An information memorandum was released in the first week of December 2012 and the 3G auction was scheduled to be carried out by mid-January 2013. However, the information memorandum was not approved by the PTA approving board due to disagreements over the process of hiring the external consultants, which was claimed not to be in accordance with applicable law.
- The sales tax applicable to the telecoms industry in Pakistan is 19.5%, which is 3.5 percentage points higher than the sales tax which applies to other sectors (16%). A withholding tax at 10% is also applicable and affects an estimated 100 million people. In addition to that, the tax collection point for mobile phones has been changed to the import stage and the amount of such tax increased to PKR 1,000 for smart phones and PKR 500 for other phones. A SIM activation tax has now been abolished. Collective cellular industry efforts are underway to reduce these taxes.
- Access promotion contribution (APC) is a financial premium given to local loop operators (either fixed local loop or wireless local loop) on international traffic terminated in Pakistan. APC was reduced to USD 0.0125/min with effect from 1 October 2011. In August 2012, the Ministry of Information Technology (MoIT) issued a policy directive for the establishment of an international clearing house (ICH) which states that the local loop operators are to be paid USD 0.029/minute as APC. In addition, a separate MTR for international incoming traffic was proposed for mobile operators (MTR-I) but has yet to be determined. Telenor Pakistan, with industry support is, leading the case for advocating to the MoIT/PTA the use of the already agreed-upon formula for APC and/or MTR-I. Whilst the policy directive was suspended following a claim before the Lahore High Court, this suspension was reversed by the Supreme Court in February 2013.
- On 22 May 2012, the Supreme Court of Pakistan made an order limiting the number of SIM cards per unique CNIC (Computerized National Identity Card, meant to identify a natural person) to five [per person] [across] all operators (a reduction from 10 SIM cards per person per operator). The PTA has directed all operators to establish a combined database containing the necessary information and data to ensure that this limit is not exceeded. Whereas the PTA considers that these directions should be implemented retrospectively, the industry is of the opinion that the checks were only to be implemented on sales of new SIM cards after 22 May 2012. An application has been filed before the Supreme Court in this regard.