ISLAMABAD, July 20: Pakistan is set to unveil a major telecom de-regulation plan in a bid to become a regional hub for communications in central and southern Asia, President Pervez Musharraf said here on Saturday.

The liberalisation will be aimed at attracting foreign and local investments into the growing telecom sector, Musharraf told a meeting here.

“Pakistan holds a great strategic position to become a hub of communications for Central Asia as well as South Asia,” he said, outlining the plan to bridge the digital divide in the backward region.

He said a complete de-regulation of the sector would go into effect when a monopoly on fixed-line phones granted to the state-owned Pakistan Telecommunication Company Ltd (PTCL) ends in December this year.

The government’s policy on de-regulation is currently being finalised and is set to be presented to cabinet shortly, officials said.

“The guiding principle of the policy will be transparency, fairness and non-discriminatory,” Musharraf said. “It breaks my heart when people say that there is an underhand deal.”

He went on to say: “With the synergies of the private sector (in communications) Pakistan will be a modern, progressive Islamic state, Inshallah (god willing).”

ATTA-UR-REHMAN: Science and Technology Minister Atta-ur-Rehman said the country’s rapidly growing telecom sector had the potential to absorb an investment of about 15 billion dollars in the next five years.

“The stage is set for full de-regulation and opening of the markets,” the minister said. “We are laying the red carpet for foreign investors.”

“There are two models open to us. One is to grant one or two licences and the other is complete de-regulation on the fast track.” Rehman said the policy would be put in place “within three months.”

He said experiences in the past three years showed that lowering of tariffs and reducing royalties and easing state control on the country’s four cellular operators triggered bigger growth in the industry and paid higher returns to the state.

The PTCL reduced its nationwide call tariffs by 45 per cent last year together with a 35 per cent cut in international call charges, but the company’s profits jumped from 13 billion rupees (216 million dollars) to 18 billion last year with this year’s profits projected at 19 billion.

Similarly, the removal of charges on incoming calls in the cellular networks saw a huge growth in the mobile phone market at a time when international telephone companies were facing difficulties, the minister said.

With Pakistan adopting what is known in the industry as the CPP, or call party pays, system in the middle of last year, the number of mobile phone subscribers jumped by over 405,000 subscribers to 1.14 million mobile users.

“People had a mental block with mobile phones. They did not want to pay for incoming calls. When we removed this, the growth was phenomenal,” the minister said.

“In the next three years, we may have more mobile phones than fixed lines.”

However, the minister admitted that with the ultra rapid growth in the mobile phone market, the level of service had deteriorated with networks unable to handle the call traffic.

“But that problem is being addressed and it should improve soon.”

The telephone penetration in the country of 145 million people was still low with 2.7 telephone lines for 100 people, he said, adding that the low phone penetration rate also underscored the vast potential to expand the sector.

NO UNDERHAND DEAL: In addition, Musharraf said the government was pro-actively engaged in creating an investor-friendly and pro-market environment.

The president expressed his disappointment over the aspersions cast by the media whatever the government was doing for de-regulation.

“There is no underhand deal ever going with this government and this will never happen,” Musharraf asserted.

The task ahead, he said, though difficult and challenging, the government was determined in its efforts to liberalize, de-regulate and create an enabling environment to facilitate investment and growth in the telecom and IT sectors.

He said the government was committed to introduce competition, in basic territory, on the PTCL monopoly’s expiry on December 2002.—AFP/APP