Global digitalization and the move towards a more inclusive and connected world has been a widely debated topic for decades. Pushed in the beginning by the advent of social media platforms like Facebook, Instagram and Twitter, and now the growth of telehealth and digital financial solutions amid COVID-19, online platforms have reinforced the primal human need of staying connected.
However, despite the promise, Pakistan still lags behind the rest of the world by huge margins as far as access and quality of connectivity are concerned. According to a survey conducted by International Telecommunications in 2019, Pakistan is one of the few countries outside Africa to have only around 25 percent of the population with access to broadband internet.
Globally, Pakistan scores a low 122nd ranking in mobile broadband speed and, as a result, access to health, education, and financial services has remained limited, thus adversely affecting human development indicators. It is no surprise, hence, that the lack of focus in telecommunications and the digital sphere translates to real-life economics. Currently, only a fraction of the population in Pakistan has access to the internet.
Challenges faced by the Telecommunications sector
Over the last decade, investment in Pakistan’s telecommunications sector has been much lower in comparison to the larger, more digital-focused economies of India, Russia, Brazil, Turkey, and China. Consequently, these countries enjoy a higher GDP per capita, which further cements the need for an intensive push towards wide-scale internet penetration.
Pakistan’s investment of $65-70 per capita, almost at par with Bangladesh, is half of that of India and only 8 percent of Turkey’s. By increasing digital penetration in a largely untapped economy, Pakistan has the potential to overcome transaction and information barriers. These can generate billions of dollars through e-commerce businesses, upskill the workforce for a new digital reality, and improve the quality of lives of millions of its citizens.
Due to low internet penetration and access to digital solutions, most businesses and social services continue to be delivered offline in Pakistan. While the country has made steady gains in the last few years, it still has a long road to cover in comparison to other developed and emerging countries that have embraced digitization to exploit the potential of digital solutions.
With thriving business models like Careem, EasyPaisa, and FoodPanda transforming the way users shop, fulfilling transportation needs, and allowing digital payments, democratizing internet access and promoting more excellent internet connectivity will only multiply business opportunities in Pakistan.
An example is the resounding success of Daraz, now being powered by global giant AliBaba. According to an e-commerce index compiled by Daraz, there has been a significant increase in digital payments and customers shopping online since the COVID-19 outbreak. “As customers practice social distancing and turn to in-home activities for entertainment, we have also seen an increase in searches for in-door games and gym equipment”, states the report.
The pandemic has helped to accelerate the adoption rate of online shopping and digital platforms exponentially, further cementing the belief that the market is ripe for digital disruption and growth of virtual marketplaces across all industries in Pakistan.
In a world where COVID-19 has changed perspectives toward digital spaces, telehealth start-ups such as Sehat Kahani and fintech pioneers like Finja will put Pakistan on the global map. These new-age business models are designed to be much more agile, adaptable, and productive due to their affinity towards the internet of things, machine learning, and Artificial Intelligence.
Similarly, Pakistan is ready for a move towards financial inclusion through the mainstream adoption of digital banking solutions. The pandemic has also seen wide adoption of remote working and digital classrooms in the ‘new normal’.
There is no question that, while the telecom sector in Pakistan faces a host of challenges, the key to maintaining the momentum for digital transformation is investments in telecom infrastructure. The infrastructure must be developed to be able to sustain the pressure of new technologies and the growing need of users for high-speed data.
The continuous shift of users from traditional voice and text services has forced the cellular business sector to adopt new business models and come up with a new concept of IT towers. Currently, Pakistan has around 35,000 towers, which are expected to double by 2027 as the adoption rates of 3G and 4G continue to witness an increasing trend. According to industry figures, Pakistan has a subscriber density of 5,000 users per tower, which is more than double the standard density.
Future of Telecommunications in Pakistan
For a serious digitization overhaul, the telecom infrastructure in Pakistan needs to be strengthened with high-capacity optic fibre cables and mobile towers that can manage backhaul connectivity while operating on a steady power supply being supported by regular monitoring, repair, and maintenance personnel.
Currently, the infrastructure comprises easy-to-deploy backhaul networks running on microwave radio networks with limited information-carrying capacity. The investment required for such an upgrade is hefty and painstakingly slow to make commercial sense.
Companies like Engro Enfrashare (a wholly-owned subsidiary of Engro Corporation, Pakistan) and Edotco (part of Axiata Group, Malaysia) have acquired licenses for tower business. They are actively involved in reshaping the telecom landscape in Pakistan. To develop potential business opportunities in the telecommunications infrastructure vertical, Engro had setup Engro Enfrashare.
Last year, it announced a PKR 7.5 billion investment in the telecom sector to accelerate the development of Pakistan’s connectivity infrastructure and provide an opportunity for people to be part of the new digital era. Edotco has also announced plans to invest $250 million in the next five years in Pakistan to expand and upgrade its network infrastructure to meet the projected 5-fold increase in mobile data usage in the country.
By providing mobile operators with an opportunity to reduce their capital expenditure and operating costs through sharing of existing infrastructure and jointly developing new infrastructure, these companies are helping reduce costs of connectivity for bringing users online.
The success of Pakistan’s digital agenda for a more prosperous and inclusive society hinges on the development of telecom infrastructure in the country. The changing industry dynamics and consumer needs present a strong case for uplifting telecom infrastructure, with an increased emphasis on access to uninterrupted internet connectivity and higher speeds.