Growth Of telecom Sector in Pakistan and China

 
Growth  Of telecom Sector in Pakistan and China

 

Country’s Broadband Usage

In the year 2012, Pakistan and China signed an MoU to establish a business collaboration called the Pakistan-China Broadband Line of Communication between two countries. This new line of communication would connect China and Pakistan and will help Pakistan in providing broadband access to its economic development. Some of the key Chinese telecom companies are Globe Telecom and China Mobile, which work together under the China International Telecommunication Construction Corporation Ltd (CITCC), a state-owned company. With due approval from the State Council of Pakistan, the communication line between Pakistan and China took place via Cable and Wi-Fi. This new line of communication began its operation in the year 2013 in Lahore and was later expanded to multiple countries.

Growth  of industry in Pakistan and China

In the year 2013, the remaining segment of Pakistan Telecom sector had 99% broadband access. In the year 2014, 97% of the population has broadband access. Pakistan’s gross domestic product grew from USD50.9 billion in the year 2012 to USD 90.8 billion in the year 2014. The GDP growth rate is around 3.2% per annum.

India

Low-cost Broadband

In the year 2013, India Telecom companies were investing around USD 24 billion in its broadband sector, which is a 3.1% of its GDP. The digital infrastructure in India is likely to have improved in the year 2014 to post 3.5% in the year 2014. This data would probably paint a different picture for the growth in Pakistan, due to the lack of broadband in Pakistan.

Feature analysis (Swot)

Porter’s five forces analysis

Threat of new entrants

Current government of Pakistan has been passing strict laws for new entrants in the Pakistan Telecom sector, including banning cable TV, ISPs, physical access gateways and gate locks for the same. Under this condition, any company willing to enter the Telecom sector of Pakistan should be twice the amount of customer power of the existing players. To address this threat, the government has also increased taxation for import of telecom equipment like Wifi, broadband routers, and wireless modems and systems that can be introduced into Pakistan Telecom sector.

Threat of substitute products

In Pakistan, the threat of substitute products can be shown as present, with plenty of alternative ways of accessing internet such as mobile connectivity, laptops, PCs, mobile services, social media, DSL lines and High Speed internet lines. In China, the threat of substitute products is present, too, with other media such as bloggers, chat rooms, texts message and pay phones available.

Bargaining power of suppliers

Suppliers in the Telecom industry of Pakistan have been restricted due to time, labor cost, level of expertise and technological changes in technology, available equipment and, more recently, environmental challenges to telecom companies. Telecommunications companies are forced to purchase their equipment from suppliers, with technology companies having highest bargaining power. But in China, the suppliers are the same for the two telecom companies that are working together.

Bargaining power of buyers

According to statistics of Mobile Pakistan, 64% of Pakistan consumers use their mobile phones to access internet. The customers’ purchasing power is higher than in China, considering they only pay around $1 a month for data access.

Threat of substitute products

Some of the substitutes to telecom companies in China include natural-gas to heating, lighting, transport, health, entertainment and other home needs. The subscribers’ purchasing power in these groups is greater than in Pakistan, where the subscribers only pay around $0.6. China has a very low level of income, and this provision of the telecom services to this group is unlikely to lead to any substitute products.