According to TQR, increasing competition in local market and increasing burden of government taxes on the operators have shown mixed trend of increasing investment in one quarter and then dropping in the next quarter. However, the worsening market conditions have resulted in Orascom (Mobilink) cutting back its investments in Pakistan.
Total investment made during the second quarter (October-December 08) was $511 million and Telenor was the highest contributor with $233 million investment. The investment by other operators was as Mobilink $104 million, Ufone $72 million, Paktel $101.3 million in the second quarter. During the period under review, Warid made no investment. The investment by these operators was $322 million in first quarter (July-September) and out of which, $111 million was contributed by Mobolink, $3.2 million Ufone, $83.8 million Telenor and $124 million by Warid.
The mobile market revenues have turned out to be satisfactory during the second quarter period with total revenue amounting to Rs 54 billion. The companies although suffered lower profits during the 2nd and 3rd quarter of 2008, however, the year ended with much stability and growth in the industry's total revenue. The dip was actually due to the price was sparked by ZONG in 2nd quarter of 2008, where the incumbent operators Mobilink, Telenor and Warid revenues showed negative trend in the very next quarter. Mobilink attributes its decline to increased taxes, inflation in the market and intense marketing activities of competitors.
Similarly, Telenor also described drop in revenues in the 3rd quarter to increased network cost and higher sales and marketing due to intensified competition in the market. Total revenues at the end of reported period stand at Rs 55 billion with maximum share from Mobilink followed by Telenor and Ufone.
Although, the aggressive entry of ZONG in local market had pushed the profit margins of incumbent operators down to some extent, but the mobile companies actually faced major dip in the ARPU's after Pakistani Rupee was depreciated up to 26 percent in Jul-Sept, 2008 and the tax rate was increased from 15 percent to 21 percent. Mobilink and Telenor turned out to be the only companies that are maintaining their ARPU's at around $3, whereas the rest of the companies could not maintain their ARPU over $2. The consolidated industry ARPU in the reported period Sept, 08 to Dec, 08 was around $2.5 as compared to around $3 in the same period of 2007.
In the 2nd quarter when the budget was announced and tax rate was increased the ARPU of all the companies were shaken and yet another shock came when the Rupee-Dollar rate went sky high due to global financial turmoil and local weakening economic situation. Therefore third quarter of 2008 depicted worst ARPU situation. However, when ARPU is calculated in rupees (local currency) then situation becomes better.
According to independent analyst firm Research and Markets Report "Pakistan Mobile forecast 2008-10, the ARPU of Pakistan mobile industry would continue to see reductions in ARPUs over the forecast period of 2008-2010. In 2010, we forecast that Pakistan will have the average ARPU level of $2.66, however, the country would keep increasing the penetration levels and would become most highly penetrated market in South Asia." Review said.
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