Telecom sector to attract $1 billion FDI in FY15

 

Telecom sector to attract $1 billion FDI in FY15

Cellular phone operators are rolling out next generation technology network to introduce their customers with fastest Internet broadband services on the mobile phone and various devices, which will attract more than one billion dollar foreign direct investment (FDI) in the financial year 2014-15.

Experts in the telecom sector predicted that mobile phone operator’s investment on 3G/4G networks have paced up in the country to deploy or upgrade their systems in the nine major cities of the country in accordance with the directives of telecom authority in this FY15.

Three out of five mobile phone companies have launched commercially 3G services including Ufone, Telenor and Zong in limited areas but their advancement of infrastructure is being underway on fast track basis that include installation and upgrading of thousands of BTS (Base Transceiver Station) in the country.

In 2005-06, the telecom sector witnessed inflows of $1.9 billion FDI during the development phase of 2G or voice mobile phone service. In the subsequent year of 2006-07, the telecom sector landed FDI of $1.82 billion and $1.43 billion. The huge spending were made then by the operators—Ufone, Telenor and Warid specially for acquiring GSM license and roll-out of their networks in these years.

Similarly, the telecom sector is likely to attract nearly million dollar investments in 2014, after it witnessed inflows of $1.2 billion in the outgoing financial year of 2013-14. It is because the cost of network swap and advancement for 3G technology is fairly high compared with GSM.

On the other hand, there two licenses one each of 3G and 4G technologies remained for auction to new telecom operators, which could also generate nearly $500 million to the national kitty.

Pervaz Iftikhar, Founder ICT Forum Pakistan, said:
[pull_quote_center]The telecom sector always plays a major role in the economy and it will do it again in attracting FDI. It will fetch more than billion dollar investment in this financial year provided that economy will remain on track with support of private sector in capitalizing potential of 3G/4G technology with respective of their demands.[/pull_quote_center]

Danny Atme, General Manager, Networks, Nokia Pakistan, said:

[pull_quote_center]The demand of mobile broadband users in Pakistan is high for speedy internet service, which indicates the greater need for investing in 3G and 4G mobile broadband networks by cellular operators for expansion of their services.[/pull_quote_center]

Ovum forecasts that the number of 3G/ WCDMA subscriptions in Pakistan will overtake GSM subscriptions by 2019, and there will be 103.4 million WCDMA subscriptions in Pakistan by the end of 2019, representing about 58% of the mobile market. It also forecasts that the adoption of 4G will be more modest than for 3G for the foreseeable future, with the number of LTE subscriptions in Pakistan reaching about 6.6 million by the end of 2019.

Pakistan is also lagging behind in launching next generation technology unfortunately even it was left behind by Afghanistan and Nigeria in this space. However despite all the challenges with respect to regulations, taxation and operational cost, telecom operators are optimistic to enter into new technological arena to boost their revenues with fresh investments.