The telecom area is one of the rapid developing sector of Pakistan's economy and is a key driver for

development. There are an expected more than 100 Million mobile clients and the area provide jobs
directly or indirectly to 1.36 million individuals.

We require not say that the telecom part is mind boggling, widely controlled and quickly advancing
to stay aware of the worldwide markets and activities. Accordingly, the accompanying is just
proposed to give an abnormal state synopsis and ought not be interpreted as a comprehensive
examination of all administrative/legitimate issues that will be influence a potential financial
specialist.

The primary enactment overseeing the telecom area in Pakistan is the Pakistan Telecommunication
(Re-association) Act, 1996 (the Act). A portion of the primary components of the Act incorporate:

• Pakistan Telecommunication Authority (PTA) is created to manage the telecom part;

• Creation of the Frequency Allocation Board (FAB) with the obligation of allotting and doling out
recurrence range to the Government of Pakistan (GOP), telecom framework, broadcasting
administrators and private clients of remote frameworks. The FAB supplanted the Pakistan Wireless
Board built up under The Wireless Telegraphy Act, 1933;

• Creation of National Telecommunication Corporation to give telecom administrations (on a non-

elite premise) to military, guard extends, the GOP, Provincial Governments and such other
Governmental foundations as the GOP may decide;

• Transfer of media transmission administrations to the private segment;

• Power of the GOP to issue approach mandates to the PTA; and

• Establishment of the Pakistan Telecommunication Company Limited (PTCL) under the Companies
Ordinance, 1984 with a restricted period to give essential telephone services under the Act.

The PTA is the essential administrative for the telecom part in Pakistan and is mindful to:

• manage the foundation, operation and upkeep of media transmission frameworks and the
arrangements of telecom administrations;

• allow, recharge, alter, exchange, screen and authorize licenses for working broadcast
communications frameworks and systems;

• manage taxes;

• advance and secure the enthusiasm of clients of media transmission frameworks and services;

• examine and mediate on grievances in the telecom area; a

• approve the sort endorsement and utilization of media transmission types of gear; and

give rules and to decide the terms of interconnect courses of action.

Principles and Regulations of the PTA

PTA has issued different principles, controls and rules to direct the distinctive administrations gave
by telecom organizations working in Pakistan. These include:
• Pakistan Telecommunications Rules, 2000;

• Access Promotion Contribution Rules, 2004;

• Universal Service Fund Rules, 2006

• Research and Development Fund Rules, 2006;

• Type Approval Regulations, 2004 (as changed now and again);

• Class Value Added Services Licensing and Registration Regulations, 2007 (as changed from

time to time);

• Pakistan Telecommunication Authority (Functions and Power) Regulations, 2006 (as corrected

occasionally);

• Telecom Consumer Protection Regulations 2009 (as changed now and again); and

• Mobile Number Portability Regulations, 2005.

Deregulation of the Telecom Sector

In July 2003 the GOP declared the Deregulation Policy for the Telecommunication Sector to

accomplish the accompanying destinations:

• to expand benefit decision for clients of media transmission administrations at aggressive and

reasonable rates;

• to advance framework improvement, particularly foundation that will expand tele density

what's more, the spread of media transmission benefits in all market sections;

• to build private interest in the media transmission part and empower nearby telecom
producing/benefit industry;

• to limit introduction to the GOP's income base temporarily;

• to change the media transmission part by empowering reasonable rivalry among specialist
organizations;

• to quicken extension of media transmission foundation to expand media transmission

administrations to un-served and under-served regions;

• to keep up a successful and all around characterized administrative administration that is steady
with worldwide accepted procedures;

• to build up two classes of essential administrations licenses: nearby circle licenses for settled line

media transmission and long-separation and universal licenses for network between districts;

• to keep up consistency with Pakistan's IT and Internet advancement approach of low costs for data
transfer capacity to influence Internet to get to moderate; and

• to defend Pakistan's national and security interests.

Dispatch of Mobile Cellular Policy

On January 28, 2004, the GOP reported the Mobile Cellular Policy with the accompanying goals:

• advancement of productive utilization of radio range;

• expanded decisions for clients of cell versatile administrations at aggressive and moderate

costs;

• private interest in the cell portable area;

• acknowledgment of the rights and commitments of portable cell administrators;

• reasonable rivalry among portable and settled line administrators; and

• to build up a viable and all around characterized administrative administration that is reliable with
universal best practices.

In 2004, the GOP additionally figured the Broadband Policy with the goals to:

• build up a reasonable, 'dependably on,' broadband rapid web service in corporate/business and
private parts crosswise over Pakistan;

• empower the section and development of new specialist organizations while invigorating the
development of existing specialist organizations; and

• empower private segment interest in nearby substance era and broadband administration
arrangement.

The Deregulation Policy for the Telecommunication Sector and the Mobile Cellular Policy urged
remote organizations to put resources into Pakistan's telecoms showcase.

Outside Investment in the Telecom Sector

Following the improvement of changing approaches to deregulate the telecoms part in Pakistan,
outside interest in the part has quickly extended. The Pakistan Board of Investment (BOI) right now
offers the accompanying motivations to remote organizations putting resources into the data
innovation and telecom areas:

• uncommon GOP consent (other than administrative necessities) is not required;

• 100% outside value is permitted;

• settlement of capital, benefits and profits is permitted;

• 0-5% custom obligation on imports of plant, hardware and gear;

• introductory devaluation stipend is half of plant, apparatus and gear Cost; and

• instalments of eminence/specialized charges are permitted up to current State Bank of Pakistan

remote trade limits.
All inclusive Service Fund (USF) and Research and Development Fund (R&D Fund)

The PTA is required under segment 4(e) of the Act to "advance the accessibility of extensive variety
of high quality, productive, successful and focused media transmission benefits all through
Pakistan". In facilitation of this strategy objective, the GOP corrected the Act and proclaimed going
with rules to set up a USF with the reason for guaranteeing un-served or generally under-served
assigned populaces and geographic ranges get satisfactory telecoms and electronic administrations
in an economical way as assets allow.

The USF is dominatingly financed by incomes gathered from media transmission licensees through
an all inclusive administration finance charge, as controlled by the GOP occasionally, subject to a top
of 1.5% of gross income less between administrator and related PTA/FAB commanded instalments.
Media transmission licensees additionally contribute 0.5% of gross income less between
administrator and related PTA/FAB commanded instalments to the R&D Fund. The motivation
behind the R&D Fund is to centre and apportion assets to, entomb alia, the limit working of HR,
national profitability upgrade and data and correspondence innovation market and item
improvement.

Telecom Sector growth in 2015

The year 2015 was awful for the telecom business of Pakistan as no new remote direct speculation
(FDI) came in, all the cell administrators were attempting to build their normal income per client
(ARPU) to wind up noticeably more aggressive and scope of 3G/4G administrations was to be
extended, however hotly anticipated merger was declared in the active year. Correspondingly, hotly
anticipated telecom strategy was likewise declared by the Pakistan Telecommunication Authority
(PTA) toward the finish of the year, while Mobilink-Warid merger began the solidification procedure
in the business. It was normal and after the effective merger another merger is on the scene. The
PTA neglected to report the bartering of the staying accessible 4G range. None of the current
administrators may demonstrate enthusiasm for it even in the following year. The back service twice
requested that the PTA do closeout with a specific end goal to make budgetary help of around Rs65
billion for the national government. The PTA permitted the mergers and acquisitions (alongside
dispensed 100 percent recurrence range) even by the two existing administrators, if they have met
all the permit commitments, including instalment and rollout necessities. As per the telecom
strategy, regardless of whether a merger or obtaining ought to be permitted to continue is an
opposition matter, which is outside the ward of range administration, and genuine mergers ought
not be hindered by a failure to exchange range licenses. In this way, aside from where there are
superseding specialized reasons, or reasons emerging out of the national intrigue, the range rights
and commitments of licenses will be transferable to the combined or getting association.

PTA and Pakistan Electronic Media Regulatory Authority are required to imply the Frequency
Allocation Board (FAB) of any merger/securing.

Strikingly, the telecom arrangement was declared not long after the Mobilink-Warid merger news.

Market sources said both the organizations needed to get leeway from controllers, similar to
Securities and Exchange Commission of Pakistan, Competition Commission of Pakistan (CCP) and
others.
Zong and Ufone are relied upon to go for combination to stay focused.

After the declaration of the merger, the aggregate supporter base of the Mobilink-Warid would
reach 45 million. Telenor is second with 33 million, Zong 23 million and Ufone 19 million. ARPU of
the telecom business is Rs205.

The merger in the telecom business was normal throughout the previous five years. Warid had led
due perseverance with various nearby and global players for that.

Industry specialists trusted that the telecom part in Pakistan is not very huge for five administrators;
subsequently mergers in the business were required. More combinations are normal inside the
following couple of years.

Amid 2015, great development in the 3G endorser base was recorded. Officially two million
supporters have begun utilizing it, while 4G administrations endorsers remained at just 400,000. The
principle prevention in selection of 4G benefit is high cost of 4G-empowered handsets, while Zong,
the main organization, which procured the permit of 4G was not able get the additional preferred
standpoint of the permit.

Clients' grievances seeing the cell administrations expanded as all the telecom administrators were
chipping away at arrange change and reconciliation venture after the dispatch of 3G/4G.

The business is extending the system and expecting development in information endorsers and
administrations.

Effect of Biometric: Total number of portable endorsers remained at 140 million when the telecom
business began biometric check of the (supporter character module) SIM cards toward the finish of
2014 on the directions of the national government to control the abuse of cell phones in fear based
oppression and different wrongdoings.

The PTA information demonstrated that the aggregate versatile endorsers were 120 million by
October 2015 after the finishing of biometric check process.

Telecom administrators needed to put enormous exertion and assets in this across the nation action
attributable to the security circumstance in the nation in the start of 2015. Nonetheless, this action
and venture of telecos appeared to be pointless as a sad episode of the Army Public School occurred
in which biometric checked SIMs were accounted for to be utilized by the assailants.

Fake exercises to bamboozle pure open for the sake of Benazir Income Support Program stipend,
alongside numerous other instant message cheats additionally proceeded. The experts are as yet
unfit to check this. Curiously, no such check was ever done in any piece of the world, even in
Afghanistan, which has been in a condition of war for over 10 years and Saudi Arabia where a huge
number of explorers visit each year.

Assessment issues continued frequenting the business players. The administration turned a hard of
hearing ear to their requests. The illustration was an inconvenience of 19.5 percent general deals
impose on information benefits by the Punjab government. The Punjab government,
notwithstanding, pulled back the assessment following a half year of its inconvenience.

None of the administrators had deducted this expense from their clients in the half year time frame
(June-November 2015) to advance information utilization in Pakistan.

Right now, charges, pertinent on telecom shoppers, incorporate deals impose on cell phone (Rs150-
500), universal portable hardware personality assess (Rs150-500), SIM issuance impose (Rs250), SIM
enactment assess (Rs250), government extract obligation/deals assess on calls and SMS (18.5
percent and 19.5 percent), propel charge (14 percent) and elected extract obligation on branchless
keeping money exchange (16 percent).

By and large, these assessments and tolls are no less than 40 percent, which is one of the most
astounding duty rates on the planet.

Among numerous different charges, deals expense of 19.5 percent on media transmission and
information administrations is collected in Khyber Pakhtunkhwa and 18.5 percent in Sindh, which is
obstructing development of much required broadband multiplication.

The business has been so far unfit to make neighborhood content for the information expansion,
while the information endorsers are for the most part utilizing information for messages, worldwide
person to person communication sites and talks.

The fast information development is conceivable just when the nearby dialect substance will be
made by the partners in Pakistan or education rate is expanded.
India is a fruitful case of information expansion through neighborhood content improvement. The
telecom business is not in a state of mind for encourage speculations because of declining ARPU,
expanding charges and moderate development of information.

A State Bank of Pakistan's report said telecom organizations are not reinvesting much and
repatriating a large portion of their profit.

Recall that the telecom segment had the second biggest offer in FDI in Pakistan after the money
related part.

Its commitment in benefit repatriations has by and large stayed considerably less than different
parts, as hardened rivalry and substantial tax collection never enabled firms to raise their net
revenues. Incomes of the media transmission organizations are continually declining.

The administration policymakers need to return to their needs and make pad for the once most
noteworthy FDI drawing in industry and one of the biggest expense contributing areas. Else, it will be
past the point where it is possible to choose and take measures.