1. Cellular sector in Pakistan: Achievements, challenges & the road ahead

2. Contents  Mobile Sector: a History  Contributions by Mobile Sector: Achievements  Challenges: More to come?  What lies ahead …

3. Background: the road to subscriber growth ‘90‘92‘98‘06‘05‘04 LL3 Operators LDI/WLL13 Operators AMPSNone GSM – 2G5 Operators ‘03 Decision to convert erstwhile T&T to corporation (PTC) Award of licenses to 2 Cellular Mobile operators Granting of another GSM based Cellular Mobile license Conversion of PTC into PTCL, creation of government operator NTC, Regulator PTA, Frequency Allocation Board (FAB) Licenses granted to two new subsidiaries of PTCL namely PTML (4th Cellular Mobile Operator) and Paknet (ISP) PTCL privatization process restarted PTCL exclusivity for fixed line telecom sector terminated Approval of Cellular Mobile Policy Issuance of licenses to 2 new Cellular Mobile, 12 LDI, and more than 76 LL operators through open auction Privatization of PTCL through selling of 26% strategic shares to Etisalat Mobile Cellular Policy - 2004 Deregulation Policy – July ‘03

4. Key Highlights  Building communication infrastructure  91% of total population covered  Cell sites: 26,300 (<2,000 in ‘04)  Amongst the fastest growing telecom markets  >90million subscribers (5m in ’04)  Cellular Tele-density: approaching 60% (3.29% in ’04)  Unprecedented Investment  Over $9b in FDI and continuing …  Highest by any sector  >30% of all total FDI in the past 5 year

5. Contributions to the Customer  Accessibility  Widespread reach across Pakistan  Multiple Distribution Channels  Affordability  Handsets < Rs.1,000  One of lowest calling rates in the world  Connectivity & Convenience  24x7 support  99% on prepaid Subscriber 90m Call Centers Employees 8,000 Business Centers > 100 Franchises > 1,000 Retailers >300,000 Mobile Business Centers

6. …Contributions to the Customer  Product innovation  SMS, MMS, ring back tones, Information portal, call blocker, e- load, Photo Express, Music services, Mobile TV, GPS tracking services, etc  Serving the underserved: USF Fund and roll outs  …

7. Contributions to the Consumers

8. Contributions to the Economy  Spurring employment  Total eco-system provides employment to over 1m people  200K of them highly skilled  12K of them directly with CMTO’s  Part time students (Call Centers)  Increase in productivity  Communication infrastructure  Secondary growth effect on other industries  Banking, media, construction

9.  Efficient Tax Collector  More than Rs. 120b annually  6% of total taxes collected by FBR  GST, withholding tax, income tax  Universal Service Fund Contribution:  Approximately PKR. 11 billion  R&D Fund Contributions:  Approximately PKR. 4 billion Contributions to the National Exchequer

10. Contribution to the Community  Considerations for social, ethical & environmental impact of products  Exemplary leadership and response to national challenges  2005 Earth quake relief  IDP Support  Khuddar Pakistan  all inclusive work environment  DUA Project  Donate Blood – Save A Life

11. Unprecedented Challenges since 2008... Economic Exorbitant Inflation (30% in ‘08) Rising Fuel Costs (80% since Jan 08) shortages (Tariff Hike by 31%) Devaluation 34% since ‘08 Increased Cost of borrowing Political & Governmental Deteriorating law and order cumbersome / multiple approvals for cell sites required Load shedding (12 Hours / day) Luxury tax

12. Unprecedented Challenges since 2008... Regulatory Taxation discriminatory GST, dual taxation on SIM Activation Tax, Import duty on handsets 3G Auction/licensing process Costs of compliance (NADRA) Competitive 5 competitors analyst are of the view that this market warrants 3- 4 cellular operators Tariff war whilst there are no lowered QoS relaxation Increasing media spending / clutter

13. Satisfaction Call quality coverage Avoid disappointment Correct billing Courteous and timely resolution of problems Fulfillment Greater product offering substituted for a wallet Accessing the un- banked Population Media Access Delight Going the extra mile Proactive customer services Business intelligence Product innovation beyond voice and telecom Going Beyond Consumer Expectations

14. 3G / Mobile Broadband Media Broadcast Financial Services Micro Finance Delighting the Consumer

15. Broadband & 3G PTA has set a throughput of 128kbps as the required speeds to qualify as being categorized as Broadband The United Kingdom has set this as 2Mbps 3G offered by PTCL as Evo product, offering ~3Mbps based on CDMA IS-95 evolution The conventional evolution of GSM systems to broadband with mobility is via the UMTS standard Today, almost all operators with a 3G spectrum opt for HSPA as the preferred technology The GoP is due to give formal approval for PTA to formally auction the UMTS specturm

16. GoP’s R & D fund The industry-academia link As per license conditions, cellular operators put aside 0.5% of revenue to the National ICT R&D fund …

17. Thank you