The News is saying that at least two groups, one of which is from UAE, wants to take up the smaller ISPs in the country in an effort to capture the
left-over Internet part of the telecommunication sector in Pakistan which so far has been overshadowed by the bigger numbers and higher attention bandwidth casted on the voice business by the international investors.
The ISP sector which once saw great amount of local investments, job bonanza, high-profile marketing and a lot of attention bandwidth from the general public has gone through its bad times. Safely, 60% of all the ISPs licensed by PTA have disappeared in thin air. Those that are left intact are operating with tight budgets, leaner teams and lower advertising spendings.
So when we are told that investment might be coming the way of these telecommunication minnows, there is a ray of hope among the ranks. But given the fact that the current investment friendly environment allows for new investment to come in and start their businesses effortlessly, is this optimism real? Why would someone want to acquire existing ISPs some of whom might already be carrying legacies and complexities that are not worth the trouble?
Customer loyalty is low (so you wont by any ISP for its customers), ISP licenses are cheap and easy (Rs 500,000 / 1 week processing time), and the infrastructure gear (fiber, remote access servers, routers, transit bandwidth etc) are cheap for Internet service providers solutions. Human resource that understands the local needs and norms can always be attracted by a bigger name that enters the market, so problem at that front too.
There is one reason why someone would acquire existing smaller ISPs instead of starting out from a clean slate – possible resistance by PTCL towards any new setup. The new PTCL management has not yet shown any considerable activity in Paknet – the nationwide ISP owned by PTCL. The sector is too small revenue wise when compared to voice. If the current speculations are correct, we all might be in for some interesting mini-battles between PTCL’s Paknet and the mopped-up bigger ISPs.
P.S: The part where the news item quotes the source is interesting:
Potential areas in Pakistan are Internet broadband, data communication services and managed IT and telecom services,” said the source. “But the groups would solely rely on the feedbacks and studies carried out by their consultant. It may take a month or more before a clear picture could emerge.
Why re-emphasize a standing fact? Investors always give weight to their consultants who are paid for the job. Somehow I find the wordings carrying some additional payload between the lines.