Smelling a cut-throat competition after the advent of two more cellular phone companies, the existing operators have geared their efforts up for an improved market share.

After free roaming incentive and a host of other offers - the state-owned Ufone, on the eve of Pakistan's Independence Day, made ripples in the telecommunication market by providing free prepaid connection to the public.

However, the three-day free connection extravaganza was marred by mismanagement, which at few outlets created a situation of lawlessness where Police was called in.

Chairman Pakistan Telecommunication Authority (PTA) Shahazada Alam had claimed that around 400,000 free connections were allotted in two days. However, market people said that only 200,000-250,000 connections were provided and many outlets were either closed after remaining open for few hours, or completely kept their shutters down all day long.

This was because of the poor management and ill-planning. It was abundantly clear that such schemes attract huge response. Many in queue were seen carrying a cell phone, perhaps they wanted to make money from the free connection.

Some dealers were of the opinion that the sale of both refurbished and new cells had flared up. Many dealers were seen charging higher prices for phone sets. Market people are of the opinion that other operators too, would come up with free connection package before two newcomers - the Telenor of Norway and the Warid of the UAE - enter the overheated Pakistani market either, at the end of this or at the beginning of next year.

Irrespective of the Ufone's mishandling of the situation - one thing has been proved that people are now more eager to acquire mobile phone rather than the PTCL's land line.

"The aim of introducing incentive packages and free connections is to gain market share and enhance customer-base ahead of the entrance of the two new companies," Head Research of the Invest Cap, stated.

The stiff competition ahead is forcing the current operators to come out with new packages like lowering of the tariff and other charges. Tariffs are likely to come down.

Realising an increasing wave in acquisition of services - the companies have gone wild in attracting as many subscribers, before the new entrants make their way into the market.

The customer-preference towards mobile phone can be gauged from the fact that around 200,000 imported mobile phone sets used to find way into the markets per month till last year, compared to 350,000-400,000 units, as of now.

I think around one million imported sets will start arriving every month from next year, said an importer. According to the Economic Survey 2003-2004, in 1999 there were only 0.2 million cellular subscribers across the country which rose to 1.2 million in 2002. By March 2004, there were a total 3.7 million subscribers in Pakistan.

The Survey said that the cellular market would experience a wave of change with the arrival of new operators. According to an estimate - a potential demand of around 25 million subscribers till 2018 is required in the country.

Currently, there are over four million subscribers in which Mobilink holds the market with three million. The customer base is expected to increase to 15-20 million in next two to five years.

In view of over 140 million population, the current base of over 4 million looks tiny as only three per cent own mobile phones. Operators forecast a jump of 10-15 per cent in view of their on-going expansion plans and cut-throat competitions.

Cellular users are expected to double in next 12 months, outstripping the fixed-line customers. Tough time lays ahead of the PTCL. To lure new users it has, continuously, been curtailing installation and call charges.

By the end of current fiscal, the company intends to provide 200,000 new connections by attracting the same number in the medium term to justify its expansion plan.

However, the existing cellular operators are busy in making additional investment on their infrastructure to provide quality service to new and existing users, besides shaking up the PTCL's monopoly.

Many such companies are not threatened with the advent of two new operators. They are welcoming as according to them this competition will help grow the market. The Mobilink, first GSM facility provider since 1994, is making an additional investment of $275 million. The company's total investment by the end of the current calendar year will touch $775 million.

It now has over three million subscribers and is heading to surpass the PTCL by the year-end. The PTCL's subscriber base as of May 2004, was 4.37 million. The Instaphone has over 550,000 subscribers and the company targets to grow by one million subscribers per year.

The company is still enhancing its current time division multiple access (TDMA network) - already covering more than 185 cities. Further a major strategic investment forward will be in a new CDMA network (Code Division Multiple Access), an American Digital Standard, that the company intends to install by the year end.

The Instaphone has, so far, invested over $100 million in this sector and plans similar investment, annually. Another, the Paktel has over 300,000 customers. The company has invested over $200 million and plans further $150 million.

The company plans to overlay its existing system with the GSM, with an installed capacity of two million users. The PTA and the Paktel are currently locked in a tussle. The PTA has demanded $3.8 million from the cell phone operator for going on the GSM but the Paktel has sued the PTA.

The Ufone, having a current customer base of around one million users, has invested $300-350 million in cell phones. The company is targeting another 2-2.5 million people in next couple of months.

All operators are now aggressively targeting rural areas to expand their network where Pakistan's 70 per cent population lives. They are adding new towns and cities to their network so that the majority of the population could reap benefit from the cellular technology.

One-third of the Pakistani population lives in poverty. The country has a fixed-line ratio of 2.7 telephone lines per 100 people. A PTA report has predicted that one million mobile phone subscribers could be picked up within six months. After deregulation, the land line base is expected to rise to 5.6 per cent or 9 million lines by 2010.