High dividends for telecom investors

Pakistan has launched its new telecom policy that will ensure high dividends to foreign and domestic investors in a market poised for multiplying its telecom and IT services as millions of potential users are bursting with enthusiasm, and taking over huge new sectors into its lap.

Upbeat IT, telecom business and industry, are putting up new inflow of foreign investment ranging between $7 billion to $10 billion within the next two to three. Pakistan received a big infolow of $15 billion between 2004 and 2008 when It and cellular services went into big strides. What has added to the joys of the present and potential foreign investors into this production-business — distribution sector is the fact that it has come on the back of auction of 3G and 4G spectrum just in May this year. The new Telecom Policy, has, as a result, warmed up everyone’s heart. Pakistan already has 132 million cellular users out of a total population of 180 million. The 3G and 4G operations are projected to yield Rs23 to 70 billion, a year, in additional revenues to the government. It is also projected to expand the GDP in a range of $3.8 to $11.8 billion as the services expand over the years.

The new five-year policy will cover nearly all aspects of IT and telecom, and cater to the trends in future demand. IT covers, interconnection, voice over internet protocol, licensing framework, broadband services, and public wi-fi. “It endeavours to achieve universally available and affordable telecom services to all users to benefit the economy and the society.” One of its good features is the plans for consumer protection. The policy will ensure that all telecom companies strictly maintain minimum Quality of Service (QoS) Standards. “QoS will be applied to marketing, customer provisioning processes, billing processes, customer support processes, payment processes, and repair-associated services.” The policy objective is to contribute toward “attainment of an all — embracing agenda for renewal and change, with the overarching aim that Pakistan becomes an industrialised and knowledge-based medium-income country by 2025.”

“Provision of WI-FI, including in-building, in-vehicles, and external commercial hot spots, based on IEEE802.11 standards shall be allowed. PTA will put in place any necessary licensing and other regulations. Facilities that enable broadband communications will be installed in new buildings, built by the state, municipalities and government enterprises.” The new policy will regulate the industry until July 2020.

The policy has been unveiled by Prime Minister Nawaz Sharif’s government which is highly pro-business and pro-IT to the extent that it wishes that from each and every rich and poor student to businessman, and house-wife to village lads should own at least a lap top. In fact it has already gifted, from its own resources, thousands upon thousand of laptops to students. Millions more are on the line to be distributed up all over the country. Laptops have become an icon of Sharif’s Pakistan Muslim League (Nawaz) government. Despite pitfall in several other areas of the government’s economic development activity, free and low-cost laptops are charming the users and new computer owners into voting for his party and the government again in the future national elections.

In order to spread this charm nationwide, the government is negotiating, with China, and other foreign manufacturers, regarding a full range of production of laptops, computers, their accessories and the whole range of IT products within Pakistan. Besides China, and other countries are also likely to move in.The work on the new policy was led by Mrs. Anusha Rehman, Minister of State for Information Technology, with the participation of Syed Ismael Shah, Chairman, Pakistan Telecommunication Authority (PTA), the industry regulator, and the Frequency Allocation Board.

It comes at a time when the economy, in general, is looking up. It is the right time for IT and telecom services to expand as the demand from the existing sectors, and the potential for the new ones, is growing fast. The overall FID inflows in fy-2014 which ended June 30, rose 12 per cent to $ 4.3 billion, State Bank of Pakistan (SBP), the central bank reported this week. The foreign investors’ interests and trends in fy-14 and the just started 2015 indicate preference for telecom, construction, consumer goods retailing, and energy, analysts say. Home remittances sent by overseas Pakistan, including those from Dubai-UAE, GCC, Saudi Arabia, UK and US have established a record of 
$14 billion in the first 11 months of 2014, up 12.4 per cent compared to the like period of 2013. In addition, the inflows up to June 30, are projected to rise above $15 billion.

The Telecom Policy review was due since 2008. The new policy has to work in the knowledge that the regulation and the market forces have to attain a growth momentum which is visible since 2000. In order to help the industry do so, it maintains an open and competitive environment and framework that will cover LDI, landline, cellular mobile, and call value-added services. There is a good news for the customers. It make it mandatory for the companies to offer an affordable entry-level tariff for broadband services.

Views expressed by the author are his own and do not reflect the newspaper’s policy.