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increasing levels of mobile penetration, coupled with increasing levels of demand fortechnologies such as VoIP and satellite access technologies, Pakistan is fast evolving asone of the telecom sector's key investment prospects. Continued market liberalization isreshaping the regulatory environment, creating a more investment friendly climate intelecom sector of Pakistan.

Last year has observed a high economic activity in the telecom sector of Pakistan whena number of l icenses have been issued to private companies at exorbitant prices. It alsobrought a major chunk of foreign investment in the country. It has also createdeuphoria among economic managers of the country who expect further investment andemployment in this sector.

telecom companies promising huge investment in the telecom sector in coming years.Mobile operators planned to invest more than USD 2.4 billion just in infrastructure andMobilink alone is investing around USD 831 million in next three years. Similarly Telenorand Warid, the newly licensed operators are investing around USD 495 million and USD325 million respectively during 2005-07 in addition to the l icense fees. Telenor in next 5years is going to invest approximately USD 1billion in Pakistan. LDI and WLL operatorsare also planning to invest USD 411.77 mill ion during 2005-2007.

Orange (telecommunications)

Introduction

Orange is the brand used by France Télécom for its mobile

network operator and Internet service provider subsidiaries. It

is the eighth largest telecom operator in the world, with over

189 million customers as of 2009. The brand was created in

1994 for Hutchison Telecom's UK mobile phone network, which

was acquired by France Télécom in August 2000. In 2006, the

company's ISP operations, previously Wanadoo, were also

rebranded Orange. Orange is now the unique commercial

façade of almost all France Telecom services. Orange France

was incorporated in 2005 and has its headquarters in Arcuei l,

France.

Orange

Type Subsidiary

Industry Telecommunications

Founded 28 April 1994

Headquarters Arcueil, France

Parent France Telecom

Website orange.com



t his country. As t he trade rule says, "Invest ment in any business, any area and anycountry calls f or caref ul judgment"

In Pakist an government is no supportive f or int ernational invest ors.{

hey get commission and wants share in profit.

Environmental issues

Current issues: wat er pollution from raw sewage, industrial wast es, and agricult ural

runoff; limit ed nat ural fresh wat er resources; a ma jority of t he population does not

have access t o pot able wat er; def orest ation; soil erosion; desertification

Little att ention was paid t o pollution and environment al issues in Pakist an until t he early

|

} } ~

s. Relat ed concerns, such as sanit ation and pot able wat er, received earlier

scrutiny. In |

}

only about

percent of rural residents and

| percent of urban

residents had access t o sanit ary f acilities; in |

} } ~

a t ot al of }

.

million Pakist anis, or

approximat ely

~

percent of t he population, had no access t o flush t oilets. Great er

success has been achieved in bringing pot able wat er wit hin reach of t he people; nearly

half t he population en joyed such access by|

} } ~

. owever, researchers at t he Pakist an

edical Research

ouncil, recognizing t hat a large proportion of diseases in Pakist an

are caused by t he consumption of pollut ed wat er, have been

uestioning t he "saf e"

classification in use in t he |

} } ~

s. Even t he

percent of t he population t hat receives its

wat er t hrough pipelines runs t he risk of consuming seriously cont aminat ed wat er,

alt hough t he problem varies by area. In Pun jab, f or example, as much as}

~

percent of

drinking wat er comes from groundwat er, as compared wit h only}

percent in

indh.

{

he central government

s Perspective Plan (|

}

� ~ ~

) and previous five-year plans do

not mention sust ainable development strat egies. Furt her, t here have been no

overarching policies f ocused on sust ainable development and conservation.{

he st at e

has f ocused on achieving self sufficiency in f ood production, meeting energy demands,

and cont aining t he high rat e of population growt h, not on curt ailing pollution or ot her

environment al hazards.

In |

} } �

Pakist an's National

onservation

trat egy Report att empt ed t o redress t he

previous inatt ention t o t he nation's mounting environment al problem. Drawing on t he

expertise of more t han

,~ ~ ~

people from a wide array of political affiliations, t he

government produced a document outlining t he current st at e of environment al healt h,

its sust ainable goals, and viable program options f or t he f ut ure.



Karachi is the financial capital of Pakistan

Of special concern to environmentalists is the diminishing forest cover in watershed

regions of the northern highlands, which has only recently come under close scrutiny.Forest areas have been thoughtlessly denuded. Deforestation, which occurred at an

annual rate of 0.4 percent in 1989-90, has contributed directly to the severity of the

flooding problem faced by the nation in the early 1990s.

Pollution

Pakistan has a huge market with 160 millions of people. Investor has interest in our country.�

ecause Pakistan is growing in last decade in tele communication sectors.

Motor cycles and scooters are major polluters in the cities

Natural Disasters

Pakistan is subject to frequent earthquakes which are often severe (especially in north

and west) and severe flooding along the Indus after heavy rains (July and

August). Landslides are common in the northern mountains.



Climate Change

New dat a from millennium-long tree-ring analyses are indicating t hat mount ains in

nort hern Pakist an have grown significantly wett er over t he past cent ury t han t hey had

been over t he last millennium �

uit e possibly due t o human-induced global warming.

In � arakoram and

� imalaya mount ains in nort hern Pakist an, t he upper reaches of t he

Indus�

alley (which supplies t he world's largest irrigation net work), a group of

researchers collect ed samples of Juniper tree rings t hat dat ed back as f ar as

.

Economic Effects

he World Bank considers Pakist an a low-income country. GDP is around $

billion at

t he official exchange rat e.

he population numbered some

million in

wit h a .

% growt h rat e. No more t han

.

% of adults are lit erat e, and lif e expect ancy isabout

years. In FY

-

, t he GDP growt h rat e was�

.

%, and unemployment was estimat ed at

%. Y ear-over-year consumer price inflation averaged

�

.

% in

. � ain inflation drivers include f ood and utility prices, t he Pakist ani rupee sdepreciation versus t he � .

�

. dollar, and higher int ernational commodity prices. Low levels of spending in t he social services and high population growt h have contribut ed t o persist ent poverty and unequal income distribution. Pakist an's extreme poverty and underdevelopment are key concerns, especially in rural areas.

he country s economyremains vulnerable t o int ernal and ext ernal shocks due t o int ernal security concerns and t he global financial crises. Any how people of Pakist an are very big hearts and spend t housand on t heir goodwill and st at us.

Industr�

Pakist an's manuf act uring sect or accounts f or about

% of GDP.

�

ott on t extile production and apparel manuf act uring are Pakist an's largest industries, accounting f orabout

.

% of t ot al exports.

t her ma jor industries include f ood processing,beverages, construction mat erials, clot hing, and paper products.

� anuf act uring sect orgrowt h has slowed in t he last

years due t o energy short ages and capacity constraints.� owever, t he sect or is f orecast t o grow

.

% f or FY

. Despit e government eff ortst o privatize large-scale parast at al units, t he public sect or continues t o account f or a significant proportion of industry.

he government seeks t o diversify t he country'sindustrial base and bolst er export industries. Net f oreign invest ment in Pakist aniindustries is only

.

% of GDP. Pakist an's search f or additional f oreign direct invest ment has been hampered by concerns about t he security sit uation, domestic and regional political uncert ainties, and questions about judicial transparency.

Performance of akistan mobile sector



NEW PROJEC

S IN I

AND

ELECOM SEC

OR OF PAKIS

AN

Nokia inaugurat ed its regional office in arachi, and

Ambassador t o Pakist an t ermed t he launch of Apple

omput ers in Lahore as a big achievement. Ericsson brings

G

aking Y ou Forward Roadshow in Pakist an.

MOBILE SERVICES

he unst oppable escalation in subscribers seems t o halt here, as t he growt h rat e hasdeclined t o

ª % approx.

he rat e of growt h has slowed,ª .

million sims were added in June, compared wit h t he average of around

million per mont h from Jan - « ay of ¬

.

hanks t o political uncert ainty, inflation rat e, judges and list goes on A t ot al of Rs

®

, ̄

ª

million in revenue was generat ed by t he t elecom industry in

¬ ¬ °

which had a ma jor impact on t he economy of Pakist an.

he sect or is also currentlycontributing

per cent out of t he °

per cent of GDP and in

¬ ¬ ̄

-¬

°

; more t han $ ª ,

±

million were invest ed in Pakist an int o t he t elecom industry t hrough FDI, making it a ma jor driver of economic growt h.

PTA has deposit ed more t han Rs® ¬

billion in exchequer besides ²

ª million dollars as

license f ees while mobile phone companies are depositing more t han Rsª

¬

ª million

annually as direct t axes.In

¬ ¬

°

, t elecom remains t he sole sect or wit hin t he economy t o have received such a subst antial invest ment, making it

®

per cent of t he overall FDI in t he country. But FDIdeclined sharply during t he t hird quart er of current fiscal from

² ¬

.±

million dollars in t he second quart er t o ª

® ̄

. ̄

million dollars in t he t hird quart er and st ood at ª

¬

million dollars f or t he nine mont h of current fiscal.Nonet heless, despit e all t he above mentioned f acts, one has t o acknowledge t he growt h in t elecom sect or, while you read t his

« arket updat e, a new subscription will increase t he cellular mobile density in Pakist an, which is

® ±

.°

% wit h t he figures of more t han ̄

million subscribers (PTA Report) in June

¬ ¬

. Addition of t ot al

ellular

ubscribers in each company are:

³

́

BILE PHONE OPER ATORµ

OMPARI¶

ON

Month Mobilink Ufone Telenor Warid Zong

May

,²

°

¯ ¬

,² ̄

°

®

ª

°

,² ¬

®

® ±

,¬

®

®

ª

® ̄

June °

,°

¯ ̄

¬ ¬

,¬

ª

̄

±

,ª ª

®

° ®

,ª

¬

, ̄

® ²

The mobile subscriber numbers f or last f ew mont hs t ell an int eresting st ory. Zong and Telenor have been growing at a brisk pace, at t he expense of Mobilink and

f one. Take a look at t he April t o May changes. Mobilink.s share of market is down t o

°

%.But in June, Warid f ought back by adding t he largest number of subscribers. Telenorand Zong seem t o be losing some st eam aft er a f ew mont hs of high subscriber int ake.Mobilink continues at sluggish pace.

f one and Telenor numbers remain extremely

close t o each ot her.



The number of cell phone subscribers' grew at t he pace of · . ̧

percent in June t o ¹ ¹

million, as compare t o

· .

º »

percent t o ¹

.»

¼

million in May½

¹

and ¾

.½

percent in April¹

̧

.½

million subscribers.

Port er five f orces analysisPort er ref erred t o t hese f orces as t he micro environment, t o contrast it wit h t he more

general t erm macro environment. They consist of t hose f orces close t o a company t hat

aff ect its ability t o serve its cust omers and make a profit. A change in any of t he f orces

normally, requires a business unit t o re-assess t he market place given t he overall change

in industry inf ormation.

Port er's five f orces or f act ors t hat shape business strat egy are:

y Threat of entry t o t he market from ot her organizations

y Supplier power

y Buyer power

y Availability of substit ut e products



y Existing competit ors

y Increasing competition bet ween mobile service provider in t he country.

y Pakist an is f acing serious economic problems t oday which would also aff ect ¿ -

f one The current downt urn in t he market is not good f or any business and

t elecommunications.

y In Baluchist an and F ATA, where À f one already have net work coverage is in

jeopardy due t o t he critical sit uation and t he operation t o be held t here.

Invest ment À f one is in danger.

y Á f one penetrat ed t he market from

Â Ã Ã

Ä

t o Â

Ã Ã Å

f airly quickly, but since t hen is

growing a bit slower.

y Æ pon arrival of t he

Ç

hina Mobile (Zong) in t he cellular industry in Pakist an,

Æ f one and ot her companies now have t o f ace strong competition. As Zong is t he

introduction of some packages of various attractions of bot h SMS and calls t o

attract cust omers. Æ f one must develop strat egies t o count er t heir strat egy and t o

survive in t he market.

y The key t hreat t o È f one also some government al policies adverse t o t he

application of t ax on t he t elecommunications industry will ultimat ely aff ect t he

revenue.

y There are some rumors about PTCL shares in t he market. Being t he subsidiary

of PTCL, É f one will also be aff ect ed by t hat.

y Telenor rumenration give more employees, compared wit h Ê f one f or many of

its skilled and compet ent employees are t here. Aff ecting t he profit ability of t he

company in t he long t erm.

y Some pressure groups are prot esting t he t owers t hat are inst alled in residential

areas. His view is t hat not good f or t he healt h of people wit h t owers near t heir

homes caused by radiation.

y Ë f one t o review t he list of subscribers who are legal and aut horized. For now

t he government has warned t o t ake stringent measures if a company does not

maint ain such a record.



The elements involved wit h each f orce are shown in t he lists below

Entry Barriers

y Economies of scale

y Propriet ary product diff erences

y Brand identity

y Switching costs

y capit al requirements

y Access t o distribution

y Absolut e cost advant ages

y Propriet ary learning curve

y Access t o necessary inputsy Propriet ary low-cost product design

y Government policy

Expected Revenge

Patents

Giving t he firm t he legal prot ection t o produce a pat ent ed product f or a number of years (see below)

Limit Pricing

Firms may adopt predat ory pricing policies by lowering prices t o a level t hat would f orce any new

entrants t o operat e at a loss

Cost advantages

Lower costs, perhaps t hrough experience of being in t he market f or some time, allows t he existing monopolist t o cut prices and win price wars

Advertising and marketing

Developing consumer loyalty by est ablishing branded products can make successf ul entry int o t he market by new firms much more expensive. This is particularly import ant in markets such as cosmetics,conf ectionery and t he mot or car industry.

Research and Development expenditure

Heavy spending on research and development can act as a strong det errent t o pot ential entrants t o an industry. Clearly much R&D spending goes on developing new products (see pat ents above) but t here are also import ant spill-over eff ects which allow firms t o improve t heir production processes and reduce unit costs. This makes t he existing firms more competitive in t he market and gives t hem a struct uraladvant age over pot ential rival firms.

Formatted: Font: Font color: Aut o



Presence of sunk costs

Some industries have very high st art-up costs or a high ratio of fixed t o variable costs. Some of t hese costs might be unrecoverable if an entrant opts t o leave t he market. This acts as a disincentive t o ent ert he industry.

y D eterminants Ì

f SÍ Î Î

lier Ï Ì wer

y Diff erentiation of inputs

y Switching costs of suppliers and firms in t he industry

y Presence of substit ut e inputs

y Supplier concentration

y Import ance of volume t o supplier

y Cost relative t o t ot al purchases in t he industry

y Impact of inputs on cost or diff erentiation

y Threat of f orward int egration relative t o t hreat of backward int egration by firms in t he industry

D eterminants Ð

f B Ñ

Ò

er Ó Ð

wer

Ba rgaining Lever ag e

y Buyer concentration versus firm concentration

y Buyer volume

Pakist an Telecommunication Aut hority has st at ed dat Pakist an has a t ot al of Ô

Õ

million mobile cell-phone

users az of MayÖ ×

Ø

×

.

In its lat est st ats f or mobile subscribers, PTA st at ed dat mobile companies added a t ot al of Ù

Ô

Ú

,×

Ú

Û

cellular users in MayÖ ×

Ø

×

wit h ×

.Ú Ö

percent growt h rat e, az compared t o ×

. Ü Ü percent growt h rat e in

AprilÖ ×

Ø

×

.

y Buyer switching costs relative t o firm switching costs

y Buyer inf ormation

Ý

Þ

y Ability t o backward int egrat e

y Substit ut e products

y Pull-t hrough

Pric e ß ensi t i v i ty

y Price / t ot al purchases

y Product diff erences

y Brand identity

y Impact on quality / perf ormance

y Buyers profits

y Decision makers' incentives



Rivalry D eterminants

y Industry growt h

y Fixed (or st orage) costs/value added

y Int ermitt ent over capacity

y Product diff erences

y Brand identity

y Switching costs

y Concentration and balance

y Inf ormational over complexity

y Diversity of competit ors

y Corporat e st akes

y Exit barriers

Governament has impose many t axes on mobile services in Pakist an.

D eterminants à

f Sá bstitution

â hreats

y Relative price perf ormance of substit ut es

y Switching costs

y Buyer propensity t o substit ut e

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