Thursday's merger of Pakistan Mobile Communications (Mobilink) and Warid Telecom would have positive implications on the country's telecom industry, said market analysts Friday. In a report issued here analysts at Topline Research rated the impact of what they said landmark transaction between the country's two leading cellular firms as 'neutral' to 'positive' on local telecom industry.
Mobilink and Warid announced their merger Thursday after their respective parent companies, VimpelCom and Dhabi Group, reached an agreement. "The size of the country's telecom market is not big enough to house five players and such consolidation would give more room to existing operators to come up with value generating services," said Hamza Raza, an analyst at Topline Research.
Moreover, he said, the industry had seen stagnating revenues in the past couple of years as customers were reducing their reliance on calls and text messages, the primary source of revenue for telecom companies. He said customers preferred to use apps that consume data for their communication needs. The 3G/4G auction did bring about a shift towards data connectivity, but the telecom operators have not been able to generate top-line growth through data traffic due to cut-throat competition among the players, said Raza.
On company level, he said, the consolidation would allow the remaining players to focus on improving service quality rather than keeping costs low in order to maintain the already low margins. Currently, the country's telecom industry has one of the lowest Average Revenue per User (ARPU) while having one of the highest tax rates. "Going forward, we believe ARPU can increase due to consolidation and increased focus on providing value added services to subscribers," said the analyst.