According to a survey, IT rebound and cellular spike, projected in 2011, will attract considerable foreign direct investment and domestic investment. It will also mean better service and more jobs, something Pakistan direly needs
By Muhammad Aftab
IT INDUSTRY and cellular telephones are coming out of a three-year trough that was impacted by the global financial squeeze. At the same time, investment in the telecom sector, by now, totals $ 11 billion, according to the Pakistan Telecom Authority (PTA), the industry regulator. “Another wave of FDI is expected after the launch of 3G services by Pakistan,” PTA also projects.
The just completed survey by Technomics, the global research organisation says, “Pakistan’s IT industry is set to rebound this year, after suffering three years of global recession and political uncertainty.” In its first ever study of the Pakistani market. Technomics says that on the back of the global slowdown “many companies slipped their revenue targets and projections in 2007”.
On the whole, domestic revenue and spending was down 40 percent, between 2006 and 2007, as exports were also hit by up to 60 percent. But, the turnaround that started in 2008 took firm roots in 2009. “A number of companies are likely to show remarkable growth by the end of 2010,” Technomics says.
The slowdown and impact of the global crisis is fully reflected in IT revenues in Pakistan. IT’s global revenue had totalled $ 800 million in 2006, while the domestic revenue was $ 200 million. The global revenue declined to $ 300 million, and domestic revenue to $ 100 million, in 2007.
By the end of 2010, the IT industry has fully overcome the decline, recovered from the recession, and return to its 2006 output and performance levels. But there has been a silver lining. Despite the painful reality, that figures reflect, the industry, largely, did quite well to weather the storm. And, in certain sectors, IT industry even continued to grow bigger.
Pakistan was slow to take to the IT industry because of forex shortages to import equipment and scarcity of skilled manpower, in the 1970s. But, then it started picking up, and continues to grow.
Technomics survey says that nearly 40 percent of the IT companies in Pakistan develop and customise their own proprietary platforms. Seventy-five companies that were surveyed employed around 7,500 full time staff for an average of 131 persons. The industry has been diversifying away from the US now towards new emerging markets like Africa, the Middle East and Asia-Pacific.
Who are the buyers of IT services? While the scope and clientele of IT products is expanding, the business, at present, is concentrated in some very high growth segments. These include telecoms, finance-banking and accounting. The three high-growth key sectors account for 75 percent of the IT industry’s total global revenue resources. But IT is already moving into several applications, including sophisticated record keeping, and wholesale and retail businesses. Mobile applications, gaming and animation constitute an emerging new area with considerable promise to become a key driver for IT in the years to come.
Besides the Technomics survey of IT, PTA has also unveiled information for the telecommunication sector. In its just unveiled annual report for 2009-10, PTA says that FDI during the year 2010 was $ 1.13 billion or $ 508 million less than it was in 2008-09. “Cellular mobile share in the total stake was 80 percent as $ 908 million was spent on infrastructure expansion in all regions of Pakistan,” PTA reports revealed. Over $ 6.3 billion was invested in five years, which created millions of job opportunities in Pakistan. As the telecom sector is heading towards maturity, investment is slowing down. The number of cellular users is rising, as the market still has a large un-served segment of the population.
Telecoms attracted over $ 6.3 billion in FDI in the last five years alone, which is an encouraging response by investors towards Pakistan’s telecom sector policies. The UAE, Norway and the US were the major sources of FDI in those five years. These investments included $ 2 billion plus from UAE, $ 890 million from US and $ 639 million from Norway.
Analysts estimate that the actual number of cellular phone subscribers is far less than 100.1 million. Cellular phone penetration is 60.4 percent and the growth in 2009-10 was 5.1 percent. The industry estimates that the actual number of active mobile phone users ranges between 60 to 65 million. The actual-and-active number and the people having more than one SIM distorts the revenue estimates like ARPU (average revenue per user) if the total industry revenue is divided and diluted by 100.1 million SIM holders (as per PTA estimates), rather than 60-65 million active users.
ARPU declines when penetration level rise, a worldwide phenomenon that is true of Pakistan, too. The cellular industry ARPU in Pakistan, in the first quarter of 2010, was $ 2.14 per person per month, which rose to $ 2.45 per month in the second quarter, but declined further to $ 2.0 in the third quarter, according to industry data.
This will lead to aggressive competition among cellular operators. Will more of it lead to better and varied services, a boon for subscribers and millions of new subscribers for the investors?
http://www.technologytimes.pk/mag/2011/jan11/issue02/an_it_and_cellular_rebound.php
No comments:
Post a Comment