Shhh..`The Minnows Are Expecting’

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.

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4 Responses to “Shhh..`The Minnows Are Expecting’”

  1. bbpk Says:

    The market potential in Internet and Broadband is not a rocket science as the country seriously lags behind in broadband penetration which is less that 1.5% of the internet population. This is the reason that Wateen, Mobilink, Telecom Malaysia are investing in this sector where they the the enormous growth & potential.

    In my personal view, acquiring ISPs will help the companies in headstarting; colocation is another challange in DSL. Mobilink was seriously after Cybrnet, Dancom, DV COM, WOL etc. So was Wateen …

    Acquisitions will leave behind only a few major players in the market – resulting in competetive products & a high internet/broadband peneratration rate badly needed at Pakistan.

    Market Consolidation is evident as we have already seen in Banking and other sectors. Warid is expected in joining hands with MTC Voda Phone etc.

    Beneficiaries would be the entire industry – That is a good sign !

  2. Global Voices Online » Pakistan: ISPs Says:

    […] Tee Emm on Pakistan has a post on the ISPs doing business. “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.” Share This […]

  3. bbpk Says:

    Consolidation is Evident yet again !

    —-

    Tuesday, April 24, 2007, Rabi-us-sani 6, 1428 A.H.
    Qatar Telecom poised to buy Burraq stake
    http://www.thenews.com.pk/daily_detail.asp?id=52622

    By Imran Ayub

    KARACHI: Qatar Telecom is to make its first foray into Pakistan as it is entering into final talks to acquire a local company with nationwide and intentional telephony networks at $30 million.

    The Arabian company known as Qtel is believed to be close to entering a deal with Burraq Telecom to acquire its 70 per cent stake with management control and has comprehensive plans to re-launch the company.

    “Actually the two sides (Qtel and Burraq) are engaged in talks for long and now they have almost reached a decision,” said a source in telecom privy to the development. “Burraq Telecom has already the licenses of nationwide and international telephony service operation it acquired from the PTA (Pakistan Telecommunication Authority).”

    A senior official at the company however avoided sharing details, and said the company would formally announce it by next week. “The things would be finalised within a week and we would then issue details,” said Asad Karim, Chief Technical Office (CTO) Burraq Telecom.

    The industry source said the company was looking for potential local and international investors to roll out its services across the country but this failed to come to fruition. The company management later decided to offload their shares to foreign investors and finally struck a deal with the Qtel, added the source.

    “Burraq Telecom Limited is a public limited company sponsored by three telecom firms, namely Comcept Private Limited, TeleCall Payphones Private Limited and Stancom Private Limited,” he added.

    Burraq Telecom was among several companies, which acquired LDI (long distance and international) and WLL (wireless local loop) licenses in 2004 following telecom deregulation bringing an end to more than five-decade-old monopoly of the Pakistan Telecommunication Company Limited (PTCL).

    The PTA ñ the telecom regulator ñ awarded over 84 licenses to more than some 35 companies for fixed line local loop (FLL) and licensed fifteen others for WLL operations in different regions while 12 licenses were issued for LDI service. However Burraq-Qtel deal is seen as a major shift of world reputed companies’ interest towards

  4. ISP Insider Says:

    Tee Emm you make good observation: “solely on the … of consultants”.
    Who do you think these consultants are??? Exhead of Cybernet.pk;) My ‘source’ in Isloo tells me and you have also mentioned in other post, Ansar and his team started own ventures. The venture is an IT consultancy that will be advising these so-called Middle East cos. Sources confirm that the article was written by the consultants who is good friend of the author, also himself an ex-dailytimes reporter;) My source also confirms your previous mention> Lakhanis were demanding too much for cybernet pak because of the high growth expected through broadband penetration. Ansar and team must have been helping in finalizing deal getting compensation and incentive to run the newly acquired cos. This didn’t seem to work out so Ansar and team have gone to start their own consultancy on advising on buyouts.
    my opinion, this ‘mysterious’ article damages credibility of the writer, but then again sensational writing sells no?


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