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Telecom sector to attract $1 billion FDI in FY15

KARACHI: 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 operators 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.
The telecom sector has attracted more than US$1.2 billion investments in the outgoing financial year 2013-14, but there will be more inflows likely to be landed in the country by different cellular phone companies in the month to come meeting it target of providing next generation technology services in nine cities in the first year of licences auction.
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 Karachi, our company has upgraded 150 BTS on 3G technology in specific areas whereas the number of cellular sites could be increased fourth-fold to tap the commercial capital of the country, an official of the mobile phone company said. The deployment of the network is first done in the areas of a particular city where factors such as purchasing power, literacy and Internet consumption are comparatively high.
The company will gradually increase the deployment of the 3G technology in parallel with the increase in the demand of public for high speed internet which will ultimately enhance the coverage areas of the new service, he said on the condition of anonymity. The presence of 3G network and service is almost proportionally same in cities where service has been launched by different operators.
 The enabling of networks for 3G services in nine cities will a milestone for the whole sector that will lead to serve a big majority of users with the latest technology creating a big demand in the rest of users of remaining cities.
There are four operator having license of next generation technologies that will bring advancement of their network in accordance with their demands to engage the users, though handsome investment in telecom sector is imminent in the new financial year.
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 and 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 licences 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.
The telecom sector always plays a major role in the economy and it will do it again in attracting FDI, Pervaz Iftikhar, Founder ICT Forum Pakistan said. 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.
There are three companies working on rollout of 3G service and one is for 4G also, this will safely cause significant advancement of physical infrastructure of the sector, thereby increasing spending of the mobile phone companies, he said.
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, said Danny Atme, General Manager, Networks, Nokia Pakistan.
But the demands and its supplies to customers depict huge gap as a study “Connectivity Scorecard” found that Pakistan has a low score in mobile broadband infrastructure. The country scored 2.09 out of 10, ranking 25 out of the 26 developing telecom markets in mobile broadband connectivity, he said.
He citied 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.

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