June 1, 2006	Thursday	Jumadi-ul-Awwal 4, 1427

KARACHI, May 31: Mobile users are likely to have many more choices in near future as some new foreign players are planning to enter the rapidly growing Pakistan mobile market shortly.

The local mobile phone industry is abuzz with reports that China Mobile is locked in talks with the parent company of Paktel while an unidentified foreign investor is said to be negotiating with Arfeen Group, the operator of Instaphone.

China Mobile Communications is close to finalise $5 billion deal to acquire Millicom International Cellular SA of Luxembourg, which is the parent company of Paktel.

Sources in the telecom industry said that the management of Instaphone was now searching for new investors so that the service could be re-launched with renewed vigour in next few months.

The Pakistan Telecommunication Authority (PTA), the watchdog of the telecom sector, was reported to have approved the deal between Arfeen Group and Millicom under which Arfeen Group had become 100 per cent owner of Instaphone by acquiring remaining 65 per cent share.

Sources said that the group was in talks with various foreign companies and it is likely to strike a deal with investors this month. However, sources added that Instaphone was likely to be re-launched in September or October this year.

Instaphone will shift from Time Division Multiple Access (TDMA), almost equal to Global System Mobile (GSM) or second generation (2G) mobile technology to third generation mobile technology (3G) or Code Division Multiple Access (CDMA), the sources said.

They said that the aggressive media campaign of Instaphone had already been suspended for the last few months as the management had seized the marketing budget.

Besides, the company faced severe competition coupled with declining profits with the entry of Telenor and Warid Telecom besides Mobilink and Ufone as many customers had shifted to these companies.

However, Instaphone still has around 40,000 retail outlets all over the country but the number of new phone subscribers has definitely shrunk owing to frequent changes in the package, calls rates and various deals being offered by new and old mobile phone operators.

The real decline in Instaphone service users had started in 2004 owing to obsolete technology being used by the operator. It was the first cellular company which entered the Pakistani market in 1990s, but now has the lowest customer-base around 500,000 users and of these 50 per cent belong to Karachi only.

Millicom had entered Pakistan in early 1990s. It had owned two cell phone operators — Paktel and Instaphone — with local telecom partners but it had offloaded its share of Instaphone to Arfeen Group.

Reports say that talks are still going on for buying Millicom by China Mobile, which would be biggest overseas acquisition by a Chinese company.

According to reports available here the state-run China Mobile has built one of the most extensive national cellular networks in the world, covering all of mainland China. With more than 250m wireless customer accounts, the company is by far the world’s biggest wireless carrier and controls about two-thirds of the mobile market in China. Millicom has nine million customers in 16 countries of Asia, Latin America and Africa.

Pakistanis are well of aware of Chinese electrical and electronic equipments, toys, motorcycles, computers, stationary items, children garments, etc. A year back Chinese mobile phones have caught the attention of price conscious customers owing to their cheaper prices. Pakistani market has already leading players like Nokia, Sony Ericcson, Samsung, Motorola, LG, Siemens, etc.

It may be noted that Paktel has slowed down its media campaign about its product and packages which had gained momentum few months back probably due to the upcoming change in the ownership.

Commenting on the upcoming changes in the mobile market, Warid Telecom CEO Hamid Farooq said Paktel may get a new life with the takeover of Millicom by China Mobile.

He said that the new player from Asia would think of injecting new capital ranging between $200-300 million in upgrading its existing network and infrastructural setup. “I think China Mobile will take at least one year to compete with existing and new players in the local market,” Hamid said.

He said that the 2007 would be a tough year for the mobile phone operators as there was a possibility that the new player with new market sentiments would further offer price cuts to lure customers.

However he said that price drop from a certain level would prove counter- productive to the health and growth of the industry. He was of the view that five operators were enough to handle the situation in view of the market size.

Out of 150-160 million Pakistan populations, only 27 million people have mobile phones and by 2008 the number of subscribers will touch 50 million.