Updated: June 2016
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 100% of Tameer Micro Finance Bank. As at 31 March 2016, Telenor Pakistan had 36.7 million mobile subscriptions, and the mobile penetration (SIM cards) and number of inhabitants in Pakistan were 68.73% and 192 million, respectively.
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.
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. On 23 April 2014, Telenor Pakistan was awarded a 5 MHz 3G spectrum in the 2100 MHz band for a period of 15 years. The licence was acquired at the reserve price of USD 147.5 million, where 50% of spectrum fee is payable within 30 days of the auction and the remaining amount will be paid in 5 equal annual instalments. Ufone also acquired a 5 MHz block of 2100 MHz spectrum, whereas both Mobilink and Zong acquired 10 MHz each. In addition Zong, as the only operator in Pakistan, also purchased 10 MHz of 1800 MHz spectrum.
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. Later, in March 2016, the remaining 49% shares were also acquired by Telenor, making Tameer Bank a wholly owned subsidiary of Telenor Group.
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 or her 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. In 2014, Easypaisa was declared the Best Mobile Money Service in the world at the GSMA awards. Easypaisa was nominated for GSMA awards in 2015 and 2016. Currently, Easypaisa serves approximately 20 million unique customers every month from 75,000 retail shops across the country.
As at 31 March 2016, Telenor Pakistan had a market share of approximately 28.0%, which is second only to Mobilink (with a market share of 29.0%). 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 2016, Ufone had a market share of approximately 15.8%, Zong had a market share of approximately 18.8%, and Warid had a market share of approximately 8.4%.
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:
- In the 2015-2016 budget, SIM activation tax of Rs. 250 on every SIM sale was abolished, while a sales tax of Rs. 250 on the sale or supply of a SIM card was maintained. In addition to that, the industry also pays a Federal Excise duty of 19.5% (with the exception of Federal Capital, Baluchistan and Sindh) and withholding tax of 14%. An IMEI Handset Registration Tax is also currently in place (but not enforced), which was increased from 150-500 Rs to 300-1000 Rs.
- Mobilink and Warid announced their merger on 26th November, 2015. The Competition Commission of Pakistan (CCP) reviewed the merger in two phases. During the Phase I review, TP submitted its intent to submit its concerns to the CCP on the merger. The CCP, in its Phase I review order made TP party to the Phase II reviews in which TP submitted its concerns. These were further deliberated on the hearings conducted by CCP on 12th February and 9th March 2016. The CCP passed its phase II review order on 18th March, 2016 whereby it approved the proposed merger of Mobilink-Warid along with remedies.
- As per the commercial forecasts, TP would require additional spectrum to meet the exponential growth in data traffic. TP would ideally need additional 5 MHz in 2100 band to meets its demand. However, due to unavailability, the Government has issued directives for conducting a spectrum auction of one block of 10MHz paired spectrum within the financial year 2016.
- PTA issued draft amendments to Consumer Protection Regulations in August 2015. Through these amendments, PTA has attempted to regulate lottery and promotional schemes in the telecommunications market. It required the CMOs to submit their promotional schemes with PTA for approval prior to launch. The CMOs have widely argued against the amendments and had collectively submitted their reservations. The PTA, irrespective of the reservations shown by the CMOs have officially published the amendments in the Gazette of Pakistan.
- The PTA has issued draft regulations on Off-net and On-net tariff regulations whereby, CMOs have been invited to submit their comments. An important matter to address in these regulations is the matter of price floors.