Business | Opinion
Significant times for the telecom market
This week's report of a significant fall in profits of the Pakistan Telecommunication Company (PTCL) during the last financial year (July-June) highlights an upside opportunity as well as a downside risk to Pakistan's telecom market.
- By Farhan Bokhari, Special to Gulf News
- Published: 23:50 September 18, 2007
This week's report of a significant fall in profits of the Pakistan Telecommunication Company (PTCL) during the last financial year (July-June) highlights an upside opportunity as well as a downside risk to Pakistan's telecom market.
The upside may indeed be that consumers are winning as companies are forced to cut the tariff charged from customers. Consequently, the fall in revenue is a natural outcome. But the downside risk relates to the future of large telecom investors and the extent to which they will remain protected against increasingly fierce competition in a market that is at the centre of fast growing competition.
The PTCL, which maintains a virtual monopoly among Pakistan's land-based telephone service providers, also offers mobile and internet data provision services. However, the PTCL's diversity in relying on sectors outside just land-based telecom services hardly helps.
Mobile phone companies and internet service providers are also under pressure as there is fast rising competition in these areas too, with companies constantly fighting to improve their services while reducing their tariff.
However, PTCL's management that is run by the UAE-based etisalat has recently indicated its intention of raising its stake in the company from 26 per cent to 51 per cent of the stock. It is a bold move which should highlight etisalat's confidence in the viability of the Pakistani market, in spite of the latest numbers for the company's performance.
As etisalat moves to increase its stake in PTCL, it will inevitably be left with few options other than to work towards a robust plan for reforming the company with the ultimate objective of tackling its falling profits. Unless PTCL's profits are not just lifted but turned into significant gains, the company's long term outlook is likely to suffer.
In raising its stake in PTCL, etisalat must accept the need to undertake a set of bold and hitherto unprecedented reforms. These must include measures such as significant cuts in the PTCL's otherwise bloated workforce and raising the quality of the company's services.
While PTCL has been privatised for some time now, the Pakistani public is yet to witness the fruit of the change of management from public sector to private sector. Pakistani consumers may have seen the benefit of this change in ways such as much easier access to new telephone connections that once took several years to be provided.
But the quality of service by PTCL's staff in areas such as dealing with complaints from subscribers still remains of simply pathetic quality.
Stories such as subscribers waiting for several days before the PTCL staff were able to deal with out-of-order phone lines in rain drenched neighbourhoods still make the rounds across Pakistan. With a population as large as that of Pakistan's 165 million people, PTCL will constantly remain under pressure to deal with an ever growing number of consumers.
There was a time that some used to debate the possibility of a second land-based telecom provider jumping into the fray at some point in time.
However, the experience around the world suggests that there may be more than one player in the mobile telephone market but that logic simply does not apply to land-based telecom service providers, who have to create a significantly large infrastructure in support of their business interests.
In the ultimate analysis, the PTCL will remain a monopoly for Pakistan's land-based telephone networks, but its success depends on the extent to which it is able to put itself through a fast paced reform programme.
- The writer is a journalist based in Pakistan.
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