KARACHI, July 10: Cellular phone customer base is expected to increase to 15-20 million in the next two to five years from the current 4 million subscribers.

In view of country's population of over 140 million, the 4 million subscribers base looks very tiny in terms of rising demand as only 3 per cent have mobile phones.

However, mobile phone operators now forecast a jump of 10-15 per cent in customer base from 3 per cent in the next two to five years in view of their on-going and future expansion plans and stiffening competition with the arrival of two new mobile phone operators.

Mobile phone-users in Pakistan are expected to double within the next 12 months, outstripping fixed-line customers for the first time and heralding a new era of communications.

Pakistan has awarded two new cellular phone licences to Warid Telecom of the UAE Syrian based Space Telecom and Norway's Telenor Mobile Communications to meet the country's growing demand for mobile phone services. The new companies will have to bring a total investment of $1 billion each within two to five years for infrastructure development.

Many analysts think that the government has made the case that the existing players in the market are not equipped to tackle the growing demand of the mobile phone industry in the country. There are questions over what new value the new players would bring to the market when the existing operators have invested in infrastructure and technology in a convincing manner.

The current mobile phone operators in Pakistan include Pakistan Mobile Communications Ltd (Mobilink), PakTel, Instaphone and Pakistan Telecom Mobile (U-fone). Besides U-fone, which is a 100 per cent owned independent subsidiary of Pakistan Telecommunications Corporation Ltd (PTCL), the other operators have foreign investors.

These four companies currently provide mobile phone services in Pakistan, where the government says that there is an urgent need to develop a more efficient telecommunications infrastructure to meet future demand.

Dawn has talked to current mobile phone operators to carve out their future investment and expansion plans.

Director marketing, Mobilink, Bilal Munir Shaikh told Dawn from Islamabad that the company, since its inception in 1994, has invested heavily in its infrastructure to provide cellular communication service backed by best available technology. It introduced the first GSM-based cellular service in Pakistan. The plans for additional investment of $275 million are ongoing as expansion of infrastructure is a continuous process.

The figure, he added, reflects the investment that the company will be making over the course of coming few months. Mobilink's total investment by the end of the current calendar year will touch $775 million.

On forecast of entire mobile phone customer base, he said "the cellular market size is estimated to be between 15-20 million within 3 to 5 years."

"We aim to maintain our position as the market leader by continuously upgrading and expanding infrastructure to provide the best level of service to our growing subscriber base," he said.

Mobilink, having over 2.8 million subscribers, is heading to surpass the PTCL subscriber base by the end of the current year. The current PTCL subscriber base (as of May 2004 as per PTCL website) is 4.37 million.

The cell phone giant enjoys 64 per cent market share. Two new mobile phone operators are landing in Pakistan by the end of this year or early next year. To a query whether Mobilink feels threatened of losing market share, Bilal Shaikh said the company would continue to work as per the expectations of customers, so that it could maintain its market leadership. However, he attributed the success of Mobilink to the firm commitment of investment in Pakistan by its majority shareholder Orascom Telecom Holding.

To a query over plans to extend network in rural areas where Pakistan's 70 per cent population lives, he said the company has been working continuously to expand cellular services in the less developed cities of Pakistan so that the majority of population can reap the benefits of cellular technology.

He said that the company is continuously adding new towns and cities to its service network and currently had reach over 290 cities in Pakistan. By the end of the current calendar year its service would have reached 350 towns and cities. These cities are located all over Pakistan and are very close to/ accessible from rural areas as well. Moreover, the company is already providing coverage on the major highways including Motorway, GT Road and Indus Highway.

There are over a million cellular subscribers in Pakistan today. With the continuation of the current government policies, the future of businesses in general and the cellular industry in particular is very bright, he said.

Bilal said that the government has been very supportive of the cellular industry and has come up with a new cellular policy that would help in its growth. For the budget 2004-2005 the industry had proposed to the government that activation charges for mobile phone connections should be lowered. The proposal was accepted and the activation charges were dropped from Rs2,000 to Rs1,000.

Chief Executive Officer, Pakcom Limited (Instaphone), Iain Williams thinks that currently there are about 4.5 million mobile users now. "There should be 12-15 million within two-three years," he adds.

"The company has over 550,000 subscribers and we now target to grow by one million subscribers per year," he told Dawn from Islamabad.

On future investment plans, Iain says the company is still growing its current time division multiple access (TDMA network) - already covering more than 185 cities. Further a major strategic investment going 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 company has so far invested over 100 million in mobile phone sector of Pakistan and plans to invest with similar volume annually," he says.

On government's policies, he says the lowering of the activation tax from Rs2,000 to Rs1,000 is a positive step and has been passed directly to the consumer. He hopes that more reductions will follow.

Instaphone chief says that the company is not threatened with the two future mobile phone operators. "We welcome the competition this would only help grow the market. There would be room for all operators to grow," he says.

On future plans to extend your network in rural areas, he says the company with now over 185 cities has a strong position in coverage.

To a query why his company has not emerged as a tough competitor for three other mobile phone companies, Iain Williams says Insta has been an effective operator and the company is in fact still the second largest operator based on its prepaid products -Instaphone and InstaXcite.

The key weakness for Insta, he says, has been that TDMA handsets have not been as varied and popular as GSM (global system mobile). Despite the actual service being as good and frequently better than the GSM service. CDMA handset prices and range are better and Insta will become even more competitive, he adds.

CDMA technology is the newest state of the art cellular technology and is now being deployed in North America, China and India. This technology is superior to what is available with cellular networks in Pakistan today. He claims his company as a unique amongst operators which offers 12 months incoming free on its prepaid products besides the company has waived off roaming charges within all regions expect north to south. Additionally Insta's Xcite product gives the lowest outgoing airtime rates in the market.

Another player, Paktel has over 300,000 customers. A source said that the company has invested over $200 million and plans further investment of $150 million. Paktel is soon to overlay its existing system with GSM with an installed capacity of two million users, a source in Paktel said.

A number of senior executives of Ufone have been approached and surprisingly every executive asked this scribe to talk to other person or said that today is holiday.

However, one of the Ufone executive claimed that the company, having a current customer base of 600,000-650,000, has so far invested $300-350 million in cell phone segment. The company is targeting another 2-2.5 million people to have mobile phones in the next couple of months.

Meanwhile another Ufone executive did not agree with this estimates. He claimed that Ufone subscriber base is close to one million and the company plans another three to four million subscribers by the next year. He said the company has so far invested $150 million.

Pakistan's population is 145 million people. One third of the population lives in poverty, earning less than two dollars a day, according to the United Nations figures. Pakistan now has a fixed- line telephone penetration of 2.7 telephone lines per 100 people. A Pakistan Telecommunication Authority (PTA) report published in March predicted that one million mobile phone subscribers could be picked up within six months.

After deregulation, landline telephone penetration is expected to rise to 5.6 percent or 9.0 million lines by the year 2010. Mobile phone penetration is projected to reach the same level earlier.

Mobile phones are going to surpass over 4 million land-based telephones as the mobile phone subscribers number is expected to rise from 4 million to 7 million in 2005, according to PTA estimates. However, private sector estimates are that this would happen much earlier, most probably within the next 12 months.