Boston, MA -- (SBWIRE) -- 10/25/2013 -- Pakistan's telecommunications market is one of the most underdeveloped in Asia Pacific. At the end-2011, Pakistan had the region's second lowest mobile penetration rate, a situation that is also similar in the fixed-line and broadband sectors. Additionally, the regulator has yet to auction 3G licences, leaving mobile operators dependent on basic 2G voice and SMS, as well as organic subscriber growth for revenue generation. This leaves Pakistan with significant room for growth, although the potential could materialise only in the medium- to long term.

Key Data

- Pakistan's mobile sector continued to fluctuate due to events such as restrictions on SIM sales through retail channels. The market recorded 125.0mn mobile subscribers in the country at the end of May 2013, up from 121.9mn in December 2012. Mobile broadband solutions, particularly EV-DO, continued to outperform and should overtake DSL in the next few years. EV-DO accounted for 36.2% of the broadband market in April 2013, behind DSL's 39.4% market share.
- Operators' ARPUs are expected to continue trending downwards due to the reliance on 2G services and rural expansions as well as government-enforced network outages in light of security concerns.

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Risk/Reward Ratings

Pakistan fell to 15th position in BMI's Asia Pacific Telecoms Risk/Reward Ratings with a telecoms rating score of 44.1. According to most indications, the Pakistani economy is on track to record its highest annual real GDP growth rate since FY2006/07 (July-June), in line with our projection for full-year growth to come in at 4.0% this fiscal year (FY2012/13). For reference, the country achieved a 3.7% growth rate last fiscal year. Among other factors, a critical driving force behind Pakistan's slowly improving economic environment in recent years has been the aggressive easing of monetary policy by the State Bank of Pakistan

Key Trends And Developments

At the time of writing, the Pakistani government was yet to announce a concrete date for the auction of 3G licences. The government's stated plan is to issue licences by end-2013, but it remains to be seen if it can adhere to its deadline.

With effect from July 1 2013, the Federal Board of Revenue has increased withholding tax on telecom services from 10-15%. This will effectively increase prices through reduced customer recharge amount with the adverse effect on future revenues for all mobile operators.

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