ROLE OF PTA IN THE DEVELOPMENT OF TELECOM

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

Perspective ³ PTA was established under the Telecom (Re. Organization) Act 1996 To regulate telecom system and services in Pakistan ³ Headquarters in Islamabad. Regional Offices are in Karachi, Quetta, Lahore, Rawalpindi and Peshawar ³ Autonomous Body

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

Functions 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

Telecom Scenario 2002 PTCL Monopoly on Fixed Line Telephony Cellular Mobile Sector –Stagnant Competition in Value Added Services (Small Operators) Ø Pay phones Ø ISPs Ø Cable TV Low Tele Density Ø Fixed 2. 5 Total 3. 5 Ø Mobile 1. 0

Incentives to the Industry 2001 (Reduction in Fee / Royalty) ³ Mobile phone ³ ISPs ³ Royalty on Equipment Sale ³ License Fee ³ ISPs in Balochistan ³ Satellite Service - From 4% to 1. 5% - From 4% to 0. 66% - From 5% to 0% - 50% - Fee & License Abolished (Registration Only) ³ Type Approval Fee ³ Locally Manufactured Equipment - 50% ³ Foreign Manufactured Equipment - 33% Continue

Incentives to the Industry 2001 (Reduction in Fee / Royalty) ³ PTCL Leased Line Charges - 30% Reduction in 2002 For Mobile Operators - 17% Reduction in 2005 ³ PTCL Leased Line Charges - up to 39% Reduction in 2005 For LL & LDI Operators ³ Activation Charges For Mobile Phones - Rs. 2000 to Rs. 500 ³ Advance Tax on Prepaid Cards - Rs. 125 to 45* *on card value of Rs. 500

SECTOR LIBERALIZATION

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

WARID & TELENOR Serviceability OPERATIONS § Service Started WARID TELENOR May 2005 March 2005 § Cities/ Towns Covered 28 (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)

Issuance of LL & LDI Licenses v. Licenses Issued • LL – 79 • LDI - 13 v. License Fee • LL - US$ 10000 • LDI - US$ 500000 • (Performance Bond- US $10 MILLION)

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

NEW LICENSES CMT LDI LL (Fixed) WLL 2 13 79 92

Salient Regulatory Initiatives ³ Determination on Interconnect ³ Determination on Co-Location ³ Determination on Limited Mobility ³ SMP Status of PTCL and Mobilink ³ Simplified VAS Licensing Regime ³Many licenses condensed into only two ³Some licenses replaced by registration ³ Enabling environment for broadband penetration

INDUSTRY PERFORMANCE

Teledensity Growth (fixed telephony) Fixed Line Connections - 5, 318, 480 WLL Connections - 4, 17, 349 4. 00% 3. 70% 3. 50% 3. 17% 3. 00% 2. 50% 2. 00% 1. 85%1. 91% 1. 99% 2. 27% 2. 18% 2. 10% 2. 50% 2. 70% 1. 50% 1. 00% 0. 50% 0. 00% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

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

Cellular Mobile Growth Penetration 12. 7% Jun-00 Jun-02 Jun-04 Nov Dec 2005

Cellular Mobile Sites Growth

Market Share of CMT Operators

Pay Phone Growth

Internet Subscriber

REVENUE / INVESTMENT

License /Spectrum Fee 20 16, 765 2004 2005 18 16 - RS 16, 765 BILLION - RS 12, 257 BILLION 14 12 9, 267 10 8 397 6 2, 593 4 2 0 2004 2005 CMT 2005 WLL 2005 LL & LDI

Cellular Mobile Revenue

GST/CED of Telecom Sector

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

Investment Made by Major Companies COMPANY Telenor (CMT) Warid (CMT) PTCL World Call Tele. Card DV Com Dan. Com Burraq Telecom Redtone Existing Mobile Operators Total EXPECTED INVESTMENT (US $ Million) 400 392 273. 3 115 165 38 12 21. 5 38. 2 645. 5 2, 100. 5

TARIFF

Tariff Reduction of PTCL Charges (Rs. ) Incl. of 15% GST 1996 2003 2004 2005 Connection Charges 2500 Urban 1553 Rural 575 Urban 863 Rural 575 No change Line Rent 50 300 200 No change NWD Charges 42 / min 10 / min 6. 04 / min 4. 6 / min 74 / min 39 / min 23 / min 10. 35 / min* International Calls * (Prepaid Card)

Long Distance Call Rates Prepaid Calling Cards Domestic Long Distance (Rs. ) International (Rs. )* 1. 73 – 3. 45 10. 35 3. 44 2. 88 5. 74 3. 86 – 4. 54 6. 36 1. 75 3. 00 Burraq 1. 71 – 3. 09 4. 59 Circlenet 2. 04 – 3. 05 3. 98 Charges inclusive of 15% GST Company PTCL World Call DV Com Callmate Dancom * International tariffs vary from country to country and for calls to Mobile networks in different countries

Local Call Rates - WLL Company Line Rent Rs. Same Network Other Networks PTCL 174 2. 01/ 5 min Tele Card 149 0. 40 / min 2. 01/ 5 min World Call 175 Free 0. 85 / min No Installation Charges

Tariff Reduction Cellular Mobile Charges (Rs) 2000 Prepaid Air Time (On-net) 6. 25 / min Postpaid Air Time (On-net) 1. 99 2002 5. 75 / min 2004 2005 4. 75 / min - Mobilink 5. 00 / min - Ufone 1. 5– 3. 00/ min 3. 75 / min - Paktel 1. 50 1. 00 0. 75 Rs. 2. 12 / min Fixed line to Local Mobile 3. 20 / min 2. 80 / min Rs. 1. 77 / min (July 06) Roaming Charges 5. 0/min 6. 0/min Free since October Free

Achievements ² Unprecedented Growth in Telecom Sector ² Tariff Significantly Reduced ² Substantial Investment Made ² Economic Growth ² Employment Opportunities ² Healthy Competition ² Successful Holding APT Meeting ² Significant Role in Earthquake Relief Efforts ² Heavy license fee collected for the Government

CHALLENGES

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

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

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

THANKS