ROLE OF PTA IN THE DEVELOPMENT OF TELECOM SECTOR

VISIONVISION

Fair Regulatory Regime to Promote Investment , Fair Regulatory Regime to Promote Investment ,

Encourage Competition, Protect Consumer Interest Encourage Competition, Protect Consumer Interest

and Ensure High Quality ICT Servicesand Ensure High Quality ICT Services

SEQUENCE PTA ORGANIZATION AND FUNCTIONS

INDUSTRY SCENARIO

INCETIVES TO THE INDUSTRY

SECTOR LIBERALIZATION

INDUSTRY PERFORMANCE

TARIFF

CHALLENGES

Perspective

PTA was established under the Telecom (Re-

Organization) Act 1996 To regulate telecom

system and services in Pakistan

Headquarters in Islamabad. Regional Offices

are in Karachi, Quetta, Lahore, Rawalpindi

and Peshawar

Autonomous Body

Organization

MEMBER(TECHNICAL)

MEMBER(FINANCE)

CHAIRMAN

FINANCE

LAW

LICENSING WIRE LINE

LICENSING WIRELESS

ENFORCEMENT

INDUSTRY DEVELOPMENT

COMMERCIAL AFFAIRS

FABCOORDINATION

Regulate telecom systems and services through fair, transparent and judicious regulatory framework

• Issuance of licenses for various telecom services • Enforcement • Protect the interests of users and service providers• Investigate and adjudicate on complaints and other claims

Process applications for radio frequency spectrum

Promote modernization of telecommunication systems and services

Make recommendations to the Federal Government on policy matters

Functions

Telecom Scenario2002

PTCL Monopoly on Fixed Line Telephony

Cellular Mobile Sector –Stagnant

Competition in Value Added Services (Small Operators) Pay phones ISPs Cable TV

Low Tele Density Fixed 2.5 Mobile 1.0 Total 3.5

Incentives to the Industry 2001(Reduction in Fee / Royalty)

Mobile phone - From 4% to 1.5% ISPs - From 4% to 0.66% Royalty on Equipment Sale - From 5% to 0% License Fee

ISPs in Balochistan - 50% Satellite Service - Fee & License Abolished

(Registration Only)

Type Approval Fee Locally Manufactured Equipment - 50% Foreign Manufactured Equipment - 33%

Continue

Incentives to the Industry 2001 (Reduction in Fee / Royalty)

PTCL Leased Line Charges - 30% Reduction in 2002

For Mobile Operators - 17% Reduction in 2005

PTCL Leased Line Charges - up to 39% Reduction in 2005

For LL & LDI Operators

Activation Charges - Rs. 2000 to Rs. 500

For Mobile Phones

Advance Tax on Prepaid - Rs. 125 to 45*Cards

*on card value of Rs. 500

SECTOR LIBERALIZATION

Open Auction for Award of Licenses -14 April 2004

( US $ 10 MILLION Earnest money)

Companies Participated in the Auction - 9

Highest Bid - US$ 291 Million

(Existing Licensees to pay the same fee)

WARID & TELENOR

Cellular Mobile New Licensing

WARID & TELENOR Serviceability

OPERATIONS WARID TELENOR

Service Started May 2005 March 2005

Cities/ Towns Covered 28 (70 Jan 06) 3 (Now 160)

No of BTs 536 (Now 617) 350 ( Now 1000)

Deregulation Policy

Open and Technology Neutral

License Term – 20 Years (Review after 5 Years)

License Categories

• Local Loop (LL)

• Long Distance & International (LDI)

Licenses Issued

License Fee

• LL - US$ 10000

• LDI - US$ 500000

• (Performance Bond- US $10 MILLION)

Issuance of LL & LDI Licenses

• LL – 79

• LDI - 13

Spectrum auctioned through open bidding – Aug 2004

Spectrum allocated on regional basis

Licenses Issued – 92

Fee Collected – RS 14 Billion

Spectrum Auction for WLL

NEW LICENSESNEW LICENSES

LL (Fixed)LL (Fixed)

7979

LDILDI

1313

WLLWLL

9292

CMTCMT

22

Salient Regulatory Initiatives

Determination on Interconnect

Determination on Co-Location

Determination on Limited Mobility

SMP Status of PTCL and Mobilink

Simplified VAS Licensing RegimeMany licenses condensed into only twoSome licenses replaced by registration Enabling environment for broadband penetration

INDUSTRY PERFORMANCEINDUSTRY PERFORMANCE

Teledensity Growth(fixed telephony)

1.85%1.91%1.99%2.10%2.18%2.27%2.50%

2.70%

3.17%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

1996 1997 1998 1999 2000 2001 2002 2003 2004

Fixed Line Connections - 5,318,480Fixed Line Connections - 5,318,480WLL Connections - 4,17,349WLL Connections - 4,17,349

3.70%

2005

Major WLL Companies

• PTCL 238,202• TELECARD 132,500• WORLD CALL 43,114• GREAT BEAR 3,511• DV COM starting the service soon• BURAQ starting the service soon

265,612 306,493 742,6061,698,536

2,404,400

5,022,908

12,489,000

19598013

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

20,000,000

Jun 99 Jun-01 Jun-03 Jun-05

Cellular Mobile GrowthPenetration 12.7%

Jun-00 Jun-02 Jun-04 Nov\ Dec 2005

212 248 283 360

1459

6500

0

1000

2000

3000

4000

5000

6000

7000

2000 2001 2002 2003 2004 2005

Years

Cellular Mobile Sites Growth

PTML23%

Paktel5%

Telenor8%

Warid9%

Instaphone2%

Mobilink53%

Market Share of CMT Operators

10400

6696897751

127910

200439

281600

0

50000

100000

150000

200000

250000

300000

2000 2001 2002 2003 2004 2005

Years

Revenue to PTCL(Approx. Rs.10 billion)

Pay Phone Growth

500000

800000

1000000

1600000

20000002100000

0

500000

1000000

1500000

2000000

2500000

2000 2001 2002 2003 2004 2005

Users - Approx 10 millionBroadband Subscribers - 30,000

Internet Subscriber

REVENUE / INVESTMENT

License /Spectrum Fee

16,765

397

0

2

4

6

8

10

12

14

16

18

20

CMT WLL LL & LDI

2004 2005 2005 2005

2,593

9,267

2004 - RS 16,765 BILLION 2005 - RS 12,257 BILLION

Cellular Mobile Revenue

19.8

34.9

63.6

100

0

10

20

30

40

50

60

70

80

90

100

Rs.

in b

illio

n

2002-03 2003-04 2004-05 2005-06Estimated

GST/CED of Telecom Sector

8.8

11.512.1

20.4

0

5

10

15

20

25

Rs.

Bill

ion

2001-02 2002-03 2003-04 2004-2005

1.26% 1.69%

21.80%

32.40%

27.80%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

2002 2003 2004 2005 July -Sept. 05

Total FDI – US $328.7MIL (July – Sept. 05)FDI in Telecom - US $91.4 MIL(July – Sept. 05)

FDI in Telecom Sector(% of Total Contribution in Total FDI)

Investment Made by Major Companies

COMPANY EXPECTED INVESTMENT

(US $ Million)

Telenor (CMT) 400

Warid (CMT)Warid (CMT) 392392 PTCL 273.3

World Call World Call 115115 TeleCard 165 DV Com DV Com 3838 DanCom 12

Burraq Telecom Burraq Telecom 21.521.5

Redtone 38.2

Existing Mobile OperatorsExisting Mobile Operators 645.5645.5

Total 2,100.5

TARIFF

Tariff Reduction of PTCL

Charges (Rs.)Incl. of 15% GST

1996 2003 2004 2005

Connection Charges

2500

Urban - 1553 Rural - 575

Urban - 863 Rural - 575

No change

Line Rent 50 300 200No change

NWD Charges 42 / min 10 / min 6.04 / min 4.6 / min

International Calls

* (Prepaid Card)

74 / min 39 / min 23 / min10.35 / min*

Charges inclusive of 15% GSTCompany

Domestic Long Distance (Rs.)

International(Rs.)*

PTCL 1.73 – 3.45 10.35

World Call 3.45 3.44

DV Com 2.88 5.74

Callmate 3.86 – 4.54 6.36

Dancom 1.75 3.00

Burraq 1.71 – 3.09 4.59

Circlenet 2.04 – 3.05 3.98* International tariffs vary from country to country and for calls to Mobile networks in different countries

Long Distance Call Rates Prepaid Calling Cards

Local Call Rates - WLL

CompanyLine Rent

Rs.Same

NetworkOther Networks

PTCL 174 2.01/ 5 min 2.01/ 5 min

Tele Card 149 0.40 / min 2.01/ 5 min

World Call 175 Free 0.85 / min

No Installation Charges

Tariff ReductionCellular Mobile

Charges (Rs)

2000 2002 2004 2005

Prepaid Air Time (On-net)

6.25 / min

5.75 / min

4.75 / min - Mobilink

5.00 / min - Ufone

3.75 / min - Paktel

1.5– 3.00/ min

PostpaidAir Time (On-net)

1.99 1.50 1.00 0.75

Fixed line to Local Mobile

3.20 / min

2.80 / min

2.80 / min

Rs. 2.12 / min

Rs. 1.77 / min (July 06)

Roaming Charges

5.0/min 6.0/min Free since October Free

Achievements

Unprecedented Growth in Telecom Sector

Tariff Significantly Reduced

Substantial Investment Made

Economic Growth

Employment Opportunities

Healthy Competition

Successful Holding APT Meeting

Significant Role in Earthquake Relief Efforts

Heavy license fee collected for the Government

CHALLENGES CHALLENGES

MNP Allows Users to Retain the Same Number While Switching Over to Another Operator

Enhances Fair Competition

60% task completed

MNP regime will be implemented in first half of 2006

Mobile Number Portability

Many Options to Extend Telecom Facilities

(Use of WLL, VSAT, IP Technologies and

Cellular Mobile)

Plan to establish Tele-Centers through

Micro Financing

Implementation in consultations with local

Governments

Rural Communication

High Speed (128 kbps & More) “Always On” Internet

Connection

Broadband Access a Catalyst for Economic & Social

Development

Broadband Penetration very low - 30,000 Approx

Efforts in Hand to Enhance Penetration International connectivity will be enhanced soon Cost of Domestic Private Lease Circuits (DPLC) being

reviewed Creation of enabling environments

Broadband

THANKS