Investment in Pakistan IT industry up at $5.14b

Broadband penetration leaps from 3% to 15% this year

IT investment in Pakistan has risen to $5.138 billion as the sector is moving on a fast rack.

The IT's government regulator - the Pakistan Telecom Authority, or PTA - and the five key companies operating in Pakistan say "a large portion of this investment inflow is from foreign investors ranging from the UAE to Egypt, the US and China, among others". The amount includes investment made between FY-2010 and end-2015. A good year for investment was FY-2014 when the amount was $1,815.6 million and $851.6 million in FY-2015, in the wake of the 3G and 4G launch.

Khurrum Mehran, director of the PTA, said that "as a result of this launch the number of its subscribers rose swiftly to 26 million and the broadband penetration has gone up from less than three per cent to 15 per cent by now." Anusha Rehman, Minister of State for the Ministry of Information Technology and Telecom, is an aggressive and fast-moving minister to attract foreign investment for this sector.

Rehman is highly respected in Prime Minister Nawaz Sharif's cabinet. She said: "The introduction of 3G and 4G mobile broadband has brought the telecom sector at par with developed countries in terms of modern telecom services."

"We are proud of attracting these investments because this is a major input to enhance the country's annual GDP. We are also thankful to foreign and domestic investors for reposing confidence in our economy. We hope they will bring in more investment on a fast-track basis."

The quick expansion of the IT and telecom sector has also helped create more jobs, which is the key economic policy of Sharif, who stresses "more jobs for more people, especially for the young". This is why pro-business Sharif stresses the need for creation of more jobs, as he also has to contest national parliamentary elections in 2018 to return to power.

The IT and telecom sectors are expanding and offering new jobs as the economy rolls into modern business of e-commerce, e-banking, e-health, e-education, IT applications, the fast-growing and immensely popular home-based businesses and content development. Rehman and her ministry have been advised by to go all out for expanding this sector. The urgency to develop this sector is highlighted by latest World Bank studies which show that a 10 per cent expansion in high speed Internet connections boosts annual GDP growth by 1.38 per cent. In light of this, "the present exponential rise in mobile broadband users is expected to make a very positive impact on Pakistan's economic growth", officials also say.

The business and Ministry of Information Technology and Telecom report that IT exports were up 41 per cent in FY-2015 as compared to FY-2014. At the same time the content and software development is growing fast and is expected to boost the business gain in this sub-sector within the overall IT sector. What are key gains brought about to the economy by the 3G and 4G launch and its fast-track growth? It has led to the expansion of financial services, Web, e-commerce-related operations and more specifically in relation to women who constitute 51 per cent of the Pakistani population.

The overall growth of the sector is visible in all its sections. The latest PTA annual report for FY-2015 says the country's tele-density is now 61.8 per cent.

"Telecom revenues for FY-2015 are estimated to be Rs449 billion. Telecom sector contribution to the National Exchequer amounted to Rs126.26 billion," it says.

The report indicates that in the cellular mobile sector, the country had 114.7 million subscribers at end-June 2015. Egypt and Africa-based Mobilink leads the subscriber share with 29.2 per cent, followed by Norway-based Telenor with 27.5 per cent, China-based Zong 19.3 per cent, Pakistan-based and the UAE's Itesallat-affiliated Ufon with 15.5 per cent, and UAE-based Warid with 8.6 per cent.

Cell sites have increased to 40,704, covering more than 92 per cent of the land area in Pakistan. The operators are also focusing on tower sharing as a viable option to improve coverage and network efficiency.

The average revenue per user of the cellular segment increased to Rs440 during FY-2015 compared to Rs432 in FY-2014. The total outgoing national cellular traffic increased to 393.1 billion at end FY-2015, compared to 345.7 billion in FY-2014. The PTA says 393.1 billion SMS messages were exchanged on cellular network in FY-2015.

PTA chairman Syed Ismail Shah said the broadband sector is experiencing a true evolution, since the introduction of mobile broadband. "Broadband penetration rose to 8.97 per cent at end-FY-2015, as compared to just 2.07 per cent in FY-2014. The subscriber base took a huge jump of 345 per cent to reach 16.89 million at end-FY-2015."

The writer is based in Islamabad. Views expressed by him are his ?own and do not reflect the newspaper's policy

Source: http://www.khaleejtimes.com/business/banking-finance/investment-in-pakistan-it-industry-up-at-514b