KARACHI, Oct 24: The deregulation of the country's telecom industry is fast gaining momentum with dozens of more communication companies and millions of customers entering both the fixed-line and mobile telephone markets.

Before the government announced the opening of its fixed-line telephone sector to private investors in July last year, the land-line penetration rate was just 2.5 per cent of the country's population.

Now, in the wake of the auction of the fixed-line licenses in August, according to the Pakistan Telecommunication Authority (PTA) estimates, the penetration rate will rise to 8.0 per cent by 2006.

The PTA's southern zone director Rizwan Ahmed Hydri told AFP the authority had granted 98 local-loop licenses and 12 international licenses to 31 private companies in the auction.

The reforms in the telecom sector also included the granting of wireless local-loop (WLL) licenses last month aimed at providing services for infrastructure-deficient rural areas of the country.

"We expect the WLL subscriber base to reach 1.8 million and contribute about Rs12 billion to the telecom industry during the current fiscal year," research analyst Faisal Shaji said.

The fees for the three forms of various licences alone have earned Pakistan about Rs14.5 billion.

The current reforms began a decade ago with the creation of the PTA, which was tasked with deregulating the telecom sector and providing a level playing field to local as well as international stake-holders.

"PTA was created to regulate the telecom sector and our major responsibilities were to ensure easy access (of telecom) to everybody, quality of service and choice," Mr Hydri said.

The PTCL has been forced to undergo major changes since its monopoly ended last year, but Mashkoor Hussain, a senior executive with the firm, said it welcomed deregulation. "We don't think it is a threat to our company as it would significantly help grow the overall sector in the coming years," Mr Hussain said.

"We are an infrastructure-rich company with a large network from Karachi to Peshawar and our backbone is fiber-optic links," he added.

Mr Hussain said the PTCL had aggressive investment plans to double the number of its 4.46 million fixed phone connections last year.

"We are prepared for the upcoming competition and allocated about Rs29 billion for development works, which would add about four million connections to our network this year," Mr Hussain said.

The mobile phone sector will be even more lucrative for the private sector, with the auctioning of two cell phone licenses to foreign companies last year, earning the country a combined $582 million.

The two foreign companies that were granted licenses, Al-Warid Telecom of the United Arab Emirates and Norway's Telenor ASA, are expected to be important drivers to the industry when they enter the market over the next few months.

"These (new) companies are expected to invest 150 million dollars each in infrastructure in the coming years, which would generate a lot of economic activities," Mr Hydri added.-AFP