MVNOs Reluctant To Come In Pakistan

By Muhammad Yasir

Mobile Virtual Network Operators (MVNOs) are reluctant to enter Pakistani telecom market as high license fees has pushed them from operating in the country, causing loss of millions of dollars in foreign direct investment.

The Pakistan Telecommunication Authority (PTA) policy to set license fee at $ 5 million have become costly for the country and has failed to attract any MVNO after a lapse of one year since the issuance of “Framework for MNVO services in Pakistan” for international companies.

The decision to keep license fee charges exorbitantly high has scrapped the deal of one cellular operator with one MVNO last year, which could have proven to be a new emerging market for a couple of MVNOs in Pakistan.

Reportedly, three MVNOs entered the negotiations to operate under the brand of a particular MNO or cellular operator. But deals could not be sealed on the hike in license charges in view of highly competitive market and prevailing economic slowdown.

MVNO in Pakistan’s Market

A MVNO is a mobile operator that does not own its own spectrum and usually does not have its own network infrastructure. Instead, MVNOs have business arrangements with a traditional mobile operators to buy minutes of use (MOU) for sale to their own customers.

MVNOs could play a potential role to improve the real cellular tele-density in the market. The number of dormant users will be activated with aggressive marketing policy, which also will increase the subscribers’ base of cellular phone users more rapidly in the future.

MVNO is also very vital for the development and promotion of Value-Added Services in the Pakistani market, helping operators to improve their revenues in the shortest period of time.

Zong and Friendi Mobile Deal

Friendi Mobile, one of the MVNOs, had shunned its business deal with Zong due to high operating cost after hike in license charges by the regulatory body. Friendi Mobile, the MVNO, had entered into an agreement with mobile network operator ZONG in November 2009, and was planning to invest up to $100 million in Pakistan. However, it dropped the idea of investing in Pakistan when PTA increased the licence fee from $10,000 to $5 million and decided to invest in Kuwait where the licence fee is only $5,000.

Friendi Mobile, funded by US-based ePlanet Ventures, is actively involved in acquiring MVNO licences. Friendi is the first pan-regional MVNO in the Middle East.

Expert Viewpoint

Industry experts said that Friendi could bring $100 to $200 million investment in the country, which can not only benefit the national exchequer but also develop a level playing field for couple of more MVNOs to enter Pakistan’s market.

Besides Zong, other cellular operators might be engaged with other MVNOs and the industry could be expanded more with new services.

Zong welcomed the MVNOs in Pakistan because it is the youngest operator among all and needs to expand its users base, however, more operators could invite MVNOs if the fees are revised downwards in the future.

Sources in the industry said that the leading operators also pushed the regulator to keep away all MVNOs so that it should not cause trouble to the existing market players in the already competitive market.

PTA Viewpoint

A PTA official admitted that the MVNOs are reluctant to come to Pakistan becasue of high fees.

“I don’t think any MVNO operator will come to Pakistan where the competition is already very stiff,” he said on the condition of anonymity.  “At least in the near future, there will be no MVNO in Pakistan unless they are offered level playing field,” he added.

Chairman PTA Dr Muhammad Yaseen said: “A couple of MVNOs have shown interest in starting operations in the country. These firms are financially sound and serious to work in Pakistan for a long period of time,” he added.

The license charges are not the issue for MVNOs because genuine operators are likely to negotiate with operators once they finalize discussions on policy and regulations with PTA, he added.

MVNOs to outnumber mobile network operators in 2013 – Experts

* The world is now home to 602 virtual mobile operators; Middle Eastern market in particular shows signs of growth.

The number of mobile virtual network operators in the world now exceeds 600 and at current growth rates will surpass the number of mobile network operators in mid-2013, according to a new research published recently.

MVNO’s launch

35 new MVNOs launched globally in the first half of this year, in addition to the 76 market newcomers that sprang up in 2009, Wireless Intelligence reported. The number of network operator sub-brands is also growing; 14 operator-owned brands came to the market last year and a further five this year as telcos increasingly aim to target specific market segments.

The writer is a renowned journalist and associated with Daily Times. He also contributes to Telecom Recorder as an honorary correspondent.