On mobile broadband

Despite the challenging operating environment during FY21, the mobile network operators (MNOs) continued the double-digit growth run in overall mobile broadband subscriptions (3G plus 4G) last fiscal. Latest data from the Pakistan Telecommunication Authority (PTA) show that the mobile broadband subscriptions had reached nearly 116 million at the end of June 2022 – showing a yearly growth of 16 percent (or an addition 16 million subscriptions) over the tally seen at the end of June 2021.

In relative terms, the 16 percent annual growth rate in the data subscriptions during FY22 was on the declining path, due to the high-base effect. The average growth rate in the previous five fiscals from FY17 to FY21 was 27 percent – ranging between a low of 17 percent in FY20 to a high of 40 percent in FY17. However, in absolute terms, the incremental 16 million in net subscriptions during FY22 was higher than the 14 million average addition seen in the same five-year period.

With 44 million mobile broadband subscriptions, Jazz was the clear front-runner in the data game, commanding a 38 percent market share in this segment at the end of June 2022. At the second spot is Zong, with 32 million subscriptions and 28 percent market share. Telenor Pakistan occupied the number-three place, having 25 million data subscriptions and 22 percent market share. Ufone is at the last spot among major MNOs, with 13 million subscriptions and 11 percent market share.

Within the roughly 16 million subscriptions added to the overall tally during FY22, the market leader Jazz had a 35 percent share (5.5 million additions), Zong had a 29 percent share (4.6 million additions), Telenor Pakistan had a 20 percent share (3.1 million additions), and Ufone had a 15 percent share (2.4 million additions). Also part of the PTA’s data series is the operator SCO, which had roughly 1.4 million mobile broadband subscriptions as of June end 2022, with a market share of 1.2 percent.

There is still plenty of room for mobile broadband subscriptions to grow in this market. If one discounts the 116 million subscription figure by assuming a ‘Multiple-Sim Phenomenon’ where every third ‘subscriber’ owns two ‘subscriptions,’ then the number of ‘unique users’ currently being served by MNOs is estimated at 87 million. This points to about 72 percent of Pakistan’s adult population being directly served by mobile broadband. The addressable market is ever growing due to the dynamics of a youthful population.

The market is ripe for more investments by MNOs, which are fighting for monetization of data services to improve their profit margins. However, FDI inflows byoperators have been abysmal for quite some time. On top of dealing with regulatory issues (mainly) concerning taxation and spectrum pricing, the operators also have to contend with frequent macroeconomic turbulence in this market.The ongoing crisis – marked by rupee depreciation, high cost of services and power outages – has deepened the negative impact on operators’ forecasts and valuations. Fingers crossed for a letup in economic uncertainty!