Telecom Activity Roundup in AJK & NA

This report from Daily Times provides a good activity roundup relating to new Telecommunication initiatives in Azad Jammu Kashmir and Northern Areas. From the report:

In the wake of October 8 earthquake, the PTA granted temporary permission to mobile phone companies operating in Pakistan for provision of services in quake-hit areas. Later on, they were invited to obtain permanent licenses for AJK and NAs against the ILF of $10 million each.

Subsequently four mobile companies Mobilink, Ufone, Warid and Telenor acquired licenses by paying 50 percent of the license fee ($5 million) each upfront as per the terms of the payment. The $20 million (Rs 1.2 billion) collected by PTA from four operators has been deposited with the AJK Council Secretariat and Chief Secretary, NAs in the ratio of 77:23 based on the population of the two areas. Their share was Rs 927.696 million and Rs 277.104 million respectively. In view of special circumstances, PTA has not deducted any fee from the amount.

The fifth mobile license for AJ&K and NAs has recently been issued to CMPak (Paktel) for which the fees would be deposited under the same arrangements. All five mobile companies will pay remaining 50 percent (i.e. $5 million each) in 10 equal annual installments.

It may be mentioned that, with the introduction of mobile phone services people of these areas are getting enhanced communication facilities. So far, cellular operators in AJK and NAs have provided one million mobile connections. Mobile service is available in the following areas of AJK including Bagh, Bhimber, Bharhing, Kotli, Muzzafferabad, Palandri, Rawalakot, Mirpur, Dhirkot, Ghari Duppatta, Hattian Bala, Dhudyal, Barnala, Kakra, Islam Gargh, Dirkot, Chamankot, Baloch, Sehnsa, KhuiRatta, Hajira, Tarar Khel, Abbas Pur, Jaraee, Rajdhani. Thraowchi, Puna, Sumani, Charoi, Fatepur, Barnala, Paniola, etc. In Northern Areas Gilgit, Hunza, Chilas, Skardu, Shigar, Danyor have been provided mobile services.

Moreover, Special Communication Organisation (SCO) which was the major provider of telecom services in the region till very recent is working on its several developmental activities including Rural Telecom Uplift Project Phase-II for provision of 80,000 telephone lines (along with 266 km Optic Fibre), enhancement of GSM capacity by 65,000 lines, laying of 570 km optic fibre, 26 digital exchanges with VSAT connectivity and laying of outside plant (OSP) in NAs.

SCO is also planning to lay optical fibre cable link for international connectivity between China and Pakistan.

SCO has also taken initiatives to provide Internet services to these areas in the form of Dialup, DSL and CDMA 1X services by entering into O&M agreements with existing providers in Pakistan.


Worldcall Wireless in Karachi

Worldcall has banners up in various parts of the city announcing the availability of their wireless local loop service which was anticipated since May 2007. The advertisements say free local call, free nationwide calls (presumably on their own network), 85 paisa per minute to US/UK and 10 paisa/min for WLL based Internet. The service is running off Huawei’s equipment.

CDMA based WLL services have already seen earlier players like Telecard and PTCL and have drawn a mixed response in terms of service standard quality. The ‘free on-net’ calling phenomenon which was triggered by Telecard (and is now being followed by Worldcall too) has found some loyal subscribers. I regularly spot shop owners in various localities of the city keeping a ‘Go CDMA’ phone as part of their communication arsenal and most of the time, the end user is doing the ‘least cost routing’ – finding the service that provides the cheapest service to reach the particular end number.

However, with a very high/healthy tele-density that is regularly being cited in anything good is to be said about Pakistan and a stiff competition and friction between DSL providers, it looks like that Worldcall as a late entrant in this digital communication race in Karachi would be having a tough time at best.

Performance of the reported availability of EvDO services on this network would be worth observing. If you have a review of the service, please post it in the comments.

SK Telecom buying Majority Stakes in Instaphone?

According to unconfirmed but reliable news, South Korea’s SK Telecom and the Arfeens Telecommunication Group of Pakistan have finalized a deal in which the South Korean player will acquire 70% stakes of the Instaphone (& Telecard?) along with management control. SK Telecom’s website states is global aspirations as:

SK Telecom revealed three key business areas to be concentrated on. These are the furtherance of our global reach by expanding internationally, developing the convergence of telecommunications and broadcasting, and searching for new business opportunities. With an aim toward becoming a major player in information communication under an economic umbrella that will be over all of East Asia, we are actively seeking multifaceted business opportunities in overseas markets.

Established in 1984, SK Telecom has a number of interesting networks under its belt including CDMA 2000, HSDPA etc. True to the uniqueness of South Korean market, the company offers a number of wired/wireless and application services. From Wikipedia:

The company’s current services include NATE, a wired and wireless integrated multi-Internet service, June, a multimedia service, MONETA, a financial service, Telematic service such as NATE Drive and even Digital Home service. In 2004, SK Telecom launched “Hanbyul,” the world’s first DMB satellite. The carrier currently provides satellite DMB to its subscribers through its subsidiary TU Media Corp. SK Telecom also offers a variety of internet services, many through its subsidiary SK Communications. Cyworld is one of the most popular blogging services in South Korea and NateOn is one of the most popular instant messengers.

The news further puts the number of new planned base stations to be erected by the revived company at 1500 ~ 1800.

In anticipation of a possible cash injection and to reduce time-to-service, Instaphone’s management had already finalized a hardware supply deal with Huawei for an all IP CDMA EvDO Rev.A  earlier this year.

Arfeen Group manages three major voice and data brands in Pakistan (Instaphone, Telecard and Supernet) with Telecard’s being listed at the Karachi Stock Exchange. The group has been reportedly trying to strike expansion focused international telecommunication players but considered the management control to be most effective if it remained in the hands of the local minority stake holders. With a regulatory environment that has earned kudos in recent months for its consistency and neutrality and success stories of foreign managements (of Warid, Telenor etc), the demand of management control to the local minority partner was the major factor in not getting the previous deals closed.

The last un-taken group of Arfeens Telecom represent a power-house of telecommunication with all licenses tied to a single ownership flag – from the super-duper cellular to the mundane dialup ISP license.

The group has recently inducted new senior management that include Aamir Niazi as Vice Chairman. Aamir Niazi was associated with BOC Group for the past 18 years. A new CFO and a new CEO are being expected to be planted by the Koreans to give effect to the new ownership.

The Last Train

Most of the articles that appear about Pakistan’s Telecommunications market are sketchy in nature and leave a lot to be desired in terms of details and perspective. Comnews recent article aptly titled ‘ The Last Train‘ is an exception to this generalization. The 5,000 words article nicely covers all aspects of Pakistan’s Telecoms from Cellular to WLL to Wimax.

In the ‘Manna for Investors’ section, the report describes the current appetite for more fundings by the existing operators:

 For investors there are some opportunities to enter the Pakistan telecom market. Apart from buying shares of DIALLOG Company, which is looking for financing sources for expansion throughout the country, other companies like Worldcall and Instaphone also are looking for partnerships.

“Worldcall needs about USD 16 million just for implementation of its WiMax project. And for implementation of all its development plans, including WLL network expansion, HFC and Metro Fiber network construction, we need around USD 50 million,” says Sardar Ali Wattoo.

“We are capable of borrowing this amount, but if Worldcall is of interest to some well-known partner, then the majority shareholders of the company, Lahore businessman Salman Tassir and Sheikh Suleiman Hokani from Oman, are ready to share its shares in the charter capital.”

Instaphone is looking for partners for construction of its digital mobile network. “We are in the process of searching for an investor, as the first phase requires USD 300 million in investment capital. However, we are not taking a passive stance, and already have prepared 700 fields for installation of new base stations,” says head of the company Javaid Firoz.

The Pakistan telecom market is on the radar screen of major industry players. A source in Warid Telecom said that its shareholders, led by Sheikh Mubarak Al Nahaiyan, are in the process of negotiations with Vodafone for selling their share in Warid.

The gradual process of change in ownership of Pakistan telecom assets began last year, and no one is ready to evaluate the effectiveness of these investments.

Recommended reading for outsiders who want to get a good summary of local market as of 2007.

Oxygen Levels for WLL Dropping

Telenor Pakistan is following Mobilink to hit the PCO segment.  Cellular News (and others) are reporting that the service, branded as ApnaPCO, is starting off with services in the impoverished southern part of the Punjab. Telenor is said to have entered into an alliance with the National Rural Support Program (NRSP)

Wireless local loop operators in Pakistan are rightly considered smaller boys as compared to the GSM group, the bigger boys of telecoms.  When the market was really picking up subscribers in the past 18 months, the GSM group was complaining that the WLL entities are entering into their domain – mobility beyond one base station – and hence causing great losses to their business which has a very high license and operational cost. While PTA determined in favor of the GSM crowd, this never got implemented as smaller WLL operators cited VPTCL of doing the same and hence asking for an compliance from PTCL’s WLL wing before they do the same. (The limited mobility requirements as put up by PTA were debated as being impractical given the technology’s inherent mobile roots and the way the frequency has been auctioned in Pakistan for WLL services).

Still today, Diallog (Islamabad), Telecard’s GoCDMA and PTCL’s VPTCL are virtually mobile in cities where they are operational. On-net free calling combined with city-wide mobility plays well for the WLL operators who were winning certain market share from the GSM Operators.

ARPUs in the PCO sector (which, until now, used to be a WLL speciality) are very high as compared to the ARPUs of GSM market (of course, the sheer size of the two segments off-sets the effect in the favor of GSM). So the GSM guys stopped complaining and started working. First, it was Mobilink to start their PCO service and now Telenor is taking the same route.

As the boundaries between fixed phones, cell phones and PCOs blurs due to general rate reduction, the oxygen supply for wireless local loop players relying heavily on PCO business, will be on the drop in the coming days.  It seems probable that it would now be the WLL people crying foul on the GSM crowd on their getting into their business.

Telenor Mobile TV

Telenor announced a GPRS/EDGE based valued added which they are calling Mobile TV (look here for content roundup by Farhan of OurE61). This is different than the chip-based, 470 to 862 MHz analog TV reception on cell phone that can potentially be realized by technologies like FLO from Qualcomm. As rightly pointed out by this in-depth review of Telenor Mobile TV by Osama at Green & White, the service is expensive and sports pretty high procedural entry barriers.

The stunt might not have a lot of takers in the local Pakistani market but this, along with the Telenor Akhbar service (reviewed here), should send a few chills down the spine for the operators who are still basking in just the volumes of voice. With rates approaching the 50 paisa boundary and tele-density at 33%, contents will become the ARPU enhancer maintainer.

Worldcall Trials RedMax

Worldcall is currently doing trials with Redline CommunicationsRedMax platform for its Wimax (802.16d) services in Karachi Sukkar. As the company nears its launch of CDMA voice services in Karachi with 83 cell cites and a launch date (of CDMA voice services) of 6th May 2007, the same real-estate and infrastructure would be put to use for its Wimax services for which the 3.5 GHz frequency is already in the kitty.