ROLE OF PTA IN THE DEVELOPMENT OF TELECOM SECTOR VISION Fair Regulatory Regime to Promote Investment, Encourage Competition, Protect Consumer Interest and Ensure High Quality ICT Services

SEQUENCE  PTA ORGANIZATION AND FUNCTIONS  INDUSTRY SCENARIO  INCETIVES TO THE INDUSTRY  SECTOR LIBERALIZATION  INDUSTRY PERFORMANCE  TARIFF  CHALLENGES

Perspective  PTA was established under the Telecom (Re- Organization) Act 1996 To regulate telecom system and services in Pakistan  Headquarters in Islamabad. Regional Offices are in Karachi, Quetta, Lahore, Rawalpindi and Peshawar  Autonomous Body

Organization MEMBER (TECHNICAL) MEMBER (FINANCE) CHAIRMAN FINANCE LAW LICENSING WIRE LINE LICENSING WIRELESS ENFORCEMENT INDUSTRY DEVELOPMENT COMMERCIAL AFFAIRS FAB COORDINATION

Regulate telecom systems and services through fair, transparent and judicious regulatory framework Issuance of licenses for various telecom services Enforcement Protect the interests of users and service providers Investigate and adjudicate on complaints and other claims Process applications for radio frequency spectrum Promote modernization of telecommunication systems and services Make recommendations to the Federal Government on policy matters Functions

Telecom Scenario 2002 PTCL Monopoly on Fixed Line Telephony Cellular Mobile Sector –Stagnant Competition in Value Added Services (Small Operators)  Pay phones  ISPs  Cable TV Low Tele Density  Fixed 2.5  Mobile 1.0 Total 3.5

Incentives to the Industry 2001 (Reduction in Fee / Royalty)  Mobile phone - From 4% to 1.5%  ISPs- From 4% to 0.66%  Royalty onEquipment Sale- From 5% to 0%  License Fee  ISPs in Balochistan- 50%  Satellite Service- Fee & License Abolished (Registration Only)  Type Approval Fee  Locally Manufactured Equipment- 50%  Foreign Manufactured Equipment- 33% Continue

Incentives to the Industry 2001 (Reduction in Fee / Royalty)  PTCL Leased Line Charges - 30% Reduction in 2002 For Mobile Operators - 17% Reduction in 2005  PTCL Leased Line Charges- up to 39% Reduction in 2005 For LL & LDI Operators  Activation Charges - Rs to Rs. 500 For Mobile Phones  Advance Tax on Prepaid - Rs. 125 to 45* Cards *on card value of Rs. 500

SECTOR LIBERALIZATION

 Open Auction for Award of Licenses -14 April 2004 ( US $ 10 MILLION Earnest money)  Companies Participated in the Auction - 9  Highest Bid - US$ 291 Million (Existing Licensees to pay the same fee) WARID & TELENOR Cellular Mobile New Licensing

WARID & TELENOR Serviceability OPERATIONS WARID TELENOR  Service Started May 2005 March 2005  Cities/ Towns Covered28 (70 Jan 06) 3 (Now 160)  No of BTs 536 (Now 617) 350 ( Now 1000)

Deregulation Policy Open and Technology Neutral License Term – 20 Years (Review after 5 Years) License Categories Local Loop (LL) Long Distance & International (LDI)

 Licenses Issued  License Fee LL - US$ LDI - US$ (Performance Bond- US $10 MILLION) Issuance of LL & LDI Licenses LL – 79 LDI - 13

 Spectrum auctioned through open bidding – Aug 2004  Spectrum allocated on regional basis  Licenses Issued – 92  Fee Collected – RS 14 Billion Spectrum Auction for WLL

NEW LICENSES LL (Fixed) 79LDI13WLL92CMT2

Salient Regulatory Initiatives  Determination on Interconnect  Determination on Co-Location  Determination on Limited Mobility  SMP Status of PTCL and Mobilink  Simplified VAS Licensing Regime  Many licenses condensed into only two  Some licenses replaced by registration  Enabling environment for broadband penetration

INDUSTRY PERFORMANCE

Teledensity Growth (fixed telephony) 1.85%1.91% 1.99% 2.10% 2.18% 2.27% 2.50% 2.70% 3.17% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% Fixed Line Connections - 5,318,480 WLL Connections - 4,17, % 2005

Major WLL Companies PTCL 238,202 TELECARD 132,500 WORLD CALL 43,114 GREAT BEAR 3,511 DV COM starting the service soon BURAQ starting the service soon

Cellular Mobile Growth Penetration 12.7% Jun-00Jun-02Jun-04Nov\ Dec 2005

Cellular Mobile Sites Growth

Market Share of CMT Operators

Pay Phone Growth

Internet Subscriber

REVENUE / INVESTMENT

License /Spectrum Fee 16, CMT WLLLL & LDI ,593 9, RS 16,765 BILLION RS 12,257 BILLION

Cellular Mobile Revenue

GST/CED of Telecom Sector

FDI in Telecom Sector (% of Total Contribution in Total FDI)

Investment Made by Major Companies COMPANY EXPECTED INVESTMENT (US $ Million) Telenor (CMT) 400 Warid (CMT) Warid (CMT) PTCL World Call World Call TeleCard 165 DV Com DV Com DanCom 12 Burraq Telecom Burraq Telecom Redtone 38.2 Existing Mobile Operators Existing Mobile Operators Total 2,100.5

TARIFF

Tariff Reduction of PTCL Charges (Rs.) Incl. of 15% GST Connection Charges 2500 Urban Rural Urban Rural No change Line Rent No change NWD Charges42 / min10 / min6.04 / min4.6 / min International Calls * (Prepaid Card) 74 / min39 / min23 / min / min*

Charges inclusive of 15% GST Company Domestic Long Distance (Rs.) International (Rs.)* PTCL 1.73 – World Call DV Com Callmate 3.86 – Dancom Burraq 1.71 – Circlenet 2.04 – * International tariffs vary from country to country and for calls to Mobile networks in different countries Long Distance Call Rates Prepaid Calling Cards

Local Call Rates - WLL Company Line Rent Rs. Same Network Other Networks PTCL / 5 min Tele Card / min2.01/ 5 min World Call 175 Free 0.85 / min No Installation Charges

Tariff Reduction Cellular Mobile Charges (Rs) Prepaid Air Time (On-net) 6.25 / min 5.75 / min 4.75 / min - Mobilink 5.00 / min - Ufone 3.75 / min - Paktel 1.5– 3.00/ min Postpaid Air Time (On-net) Fixed line to Local Mobile 3.20 / min 2.80 / min Rs / min Rs / min (July 06) Roaming Charges 5.0/min6.0/minFree since OctoberFree

Achievements  Unprecedented Growth in Telecom Sector  Tariff Significantly Reduced  Substantial Investment Made  Economic Growth  Employment Opportunities  Healthy Competition  Successful Holding APT Meeting  Significant Role in Earthquake Relief Efforts  Heavy license fee collected for the Government

CHALLENGES

 MNP Allows Users to Retain the Same Number While Switching Over to Another Operator  Enhances Fair Competition  60% task completed  MNP regime will be implemented in first half of 2006 Mobile Number Portability

 Many Options to Extend Telecom Facilities (Use of WLL, VSAT, IP Technologies and Cellular Mobile)  Plan to establish Tele-Centers through Micro Financing  Implementation in consultations with local Governments Rural Communication

 High Speed (128 kbps & More) “Always On” Internet Connection  Broadband Access a Catalyst for Economic & Social Development  Broadband Penetration very low - 30,000 Approx  Efforts in Hand to Enhance Penetration  International connectivity will be enhanced soon  Cost of Domestic Private Lease Circuits (DPLC) being reviewed  Creation of enabling environments Broadband

THANKS