3G Auction in Pakistan to Grow Broadband Subscribers to 45m
This post also appears in TechinAsia
It’s been a long time coming, but Pakistan will soon be holding its spectrum auction for 3G and 4G networks. Three 3G licenses and two 4G licenses will be sold at the auction, which is slated for April 23. A 3G license will be sold for a minimum price of US$295 million, and the 4G rights for $210 million. The auction comes at a time when Pakistan’s government is undertaking major structural reforms to promote growth within the economy.
Pakistan has a vibrant mobile market with five operators providing 2G services to a total of 133.7 million subscribers. Those customers are worth $2.25 each per month to the telcos in terms of ARPU. Mobile subscriber numbers have grown rapidly in the country, up 4.7 percent between June 2013 and January this year. This is the current scene:
A report by Plum Consulting (PDF link) predicts that with the deployment of 3G in Pakistan, the number of broadband subscribers will rise from its current 3.35 million to 45 million by 2020 in the more optimistic high-demand forecast, or to 25 million in the low-demand forecast (see chart below). Pricing will play a pivotal role in terms of adoption, as currently users are able to get unlimited access to 2G data services for about PKR 150 ($1.50) per month for 1GB of data.
4 out of 5 telcos in contention
Four of the five Pakistani operators have bid for the new licenses. Warid, the nation’s smallest telco, has decided to opt out. The two biggest operators, Telenor and Mobilink, have stated that they would be able to deploy 3G services to the masses within a few weeks as their core infrastructure is ready for 3G. Telenor has 7,500 cell sites across Pakistan that are 3G-ready, and the firm’s CTO has stated that 4G can be deployed after some minor upgrades. Mobilink has said that it will have 9,000 cell sites by July, with 70 percent of the infrastructure already revamped for 3G.
The local mobile market is expecting strong smartphone sales in the weeks proceeding the 3G and 4G auction. Currently the smartphone market accounts for 15 percent of all mobile imports (1.5 to 1.7 million units per month), but it is expected to rise to as much as 40 percent within a year of the auction — that’s 600,000 new smartphones per month.
Some smartphone owners in Pakistan are excitedly awaiting the auction and have started posting speed test screenshots on Facebook or Twitter as operators test their networks in limited areas.