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Economics of network sharing - A case study of mobile telecom sector in Pakistan

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4 Author(s)
Choudhary, M.A. ; Eng. Manage. Dept., Nat. Univ. of Sci. & Technol., Islamabad, Pakistan ; Babar, H. ; Shakeel, H. ; Abbas, A.

The cellular mobile industry in Pakistan has shown an unprecedented growth since the promulgation of Pakistan Telecommunication (Reorganization) Act of 1996. Over 90 million cellular mobile users and penetration grew to 55.6% and 4.8 million landlines connections provide a teledensity of 58.8% to the nation. The mobile networks provide coverage to over 90 percent of the population. During 2007-08 mobiles traffic exceeded 42 billion minutes while ARPU decreased to US$ 3.11. Total telecom investment during the year 2007-08 was US $ 3.12 billion while the share of telecommunication sector in GDP was 2.0%. Telecom companies invested over US$ 10 billion during the last five years, mobile sector investment share accounted for 66% of the total investment. China Mobile alone invested about US$ 2 billion during 2007-08 for expansion of its CMPak networks. The mobile sector paid over a billion dollars in taxes to the National Exchequer during the year 2007-08. The telecom sector received above US$ 1.438 billion FDI, i.e., 28% of the total FDI and helped create over one million jobs since the deregulation of the telecom sector began. The competitive pressures and decline in ARPU has increased the need for improving technical as well as economic efficiencies. Our analyses indicate there are serious economic efficiencies embedded in infrastructure sharing paradigm for mobile operators. Only the passive sharing of additional sites can yield CAPEX savings of over 5000 million US dollars and OPEX savings of these sites can yield another billion US dollars every year. It is thus concluded that the growing business model of decoupling the revenues from that of mobile traffic warrant serious consideration.

Published in:

Collaborative Computing: Networking, Applications and Worksharing, 2009. CollaborateCom 2009. 5th International Conference on

Date of Conference:

11-14 Nov. 2009