Pakistan 3G Merger call

Pakistan’s telecoms market will have to consolidate before the government can even consider a planned push into third-generation technology, according to the head of the only European operator in the country.

Telenor, the Norwegian telecoms group, said that there was not enough profit per phone user to justify having five mobile groups in Pakistan and operators would have to consider mergers or acquisitions in order to see significant growth.

Jon Eddy Abdullah, Telenor Pakistan’s chief executive, told the Financial Times: “Most markets are [divided between] three players. Three seems a very good number. Five is too many.”

Telenor entered Pakistan five years ago and is the second largest cellular phone operator after Mobilink, a subsidiary of Egypt’s Orascom Telecom . Pakistan’s other operators are Ufone, Warid Telecom and Zong.

Mr Abdullah refused to comment on speculation that Telenor would seek to buy out one of its smaller competitors in Pakistan. However, he conceded that consolidation would “drive every shareholder to talk to everyone else.”

Pakistan is part of broader expansion by Telenor across central and southern Asia, including operations in India, Thailand, Malaysia and Bangladesh.

Asia accounted for 26 per cent of revenues in 2008, with the rest coming from eastern and central Europe and the Nordic region.

Much of Telenor’s recent focus has been on its 67.3 per cent investment in Unitech Wireless of India . But the group also sees big potential in Pakistan, which has seen a phenomenal increase in the number of mobile phone users over the past decade.

According to statistics compiled by Pakistan Telecom Authority, the main telecoms regulator, there are about 95m subscribers in a country with a total population of 180m.

Mobile phone services are available across 90 per cent of the country.

The Pakistan government has said it is committed to moving from 2G to 3G mobile phone technology though it is yet to even outline a time frame for when that might happen.

Mr Abdullah said that the government would need to offer existing operators some incentives to move towards 3G.