2006 South Asian Telecom Statistics and Market Overview Report

SUMMARY

This annual report offers a wealth of information on the overall Infrastructure development, Fixed and Mobile services, as well as Data and Internet markets in: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka.

Subjects covered include:

• Infrastructure Issues
• Regulatory issues and government policies regarding infrastructure
• Mobile networks, including Value Added and Next Generation Services, where relevant
• Development of Internet services and the growth of broadband access
• Brief overview of the major telecommunications carriers and service providers

Executive Summary

This Asia market report covers 8 countries in the South Asia sub-region. It takes an overall look at the various telecoms markets, together with a particular look at the broadband Internet and mobile segments in each of the countries.

The markets covered include:

Afghanistan As the political and social rebuilding of Afghanistan proceeds somewhat fitfully following years of war and civil unrest, the country has started putting a new national telecommunications infrastructure in place. The 2001 war destroyed a telecommunications network already suffering serious disrepair due to neglect by the Taliban. The nation's network of telephone lines was left barely functioning. With telecommunications set to play a crucial role in rebuilding the country's shattered economy and society, a properly functioning basic telephone network was always a priority. An important step was the creation of the Ministry of Communications (MoC) by the Transitional Government in early 2002. The challenge has been to attract and manage foreign investment in the country. There have been some positive signs in this regard, but there remains much work to be done.

In the meantime, the government, in a push to develop the fixed-line network, launched what it called the Local Fixed Service Provider (LFSP) program. This program was expected to see hundreds of small-scale investors set up companies at the village or provincial level using Wireless Local Loop (WLL) technology.

Bangladesh, ranks among the most densely populated countries on the globe, but its fixed-line teledensity remains the lowest in South Asia. With teledensity at less than 1%, only a relatively small proportion of the population has had access to any telecom facility. Almost 99% of homes lack a telephone and there is a four year waiting list for a fixed-line service. The situation is worse in the rural villages, with more than 90% of Bangladesh's telephone services located in urban areas. The overall situation in Bangladesh has been improved to some extent by a rapidly expanding mobile market. But after a number of years of strong growth (138% in 2005), mobile penetration was still only a little over 5% (7.5 million mobile subscribers) at end-2005, compared with close to one million fixed-line telephone services. Fixed lines services are mostly provided by the state-owned Bangladesh Telegraph and Telephone Board (BTTB), while mobile services are provided by six private operators.

The establishment in 2001 of a new regulator, the Telecommunications Regulatory Commission (TRC), signalled the start of a new push to reshape the country's telecom sector. The government can be expected to continue to vigorously pursue the de-regulation process. Expanding the national telecom infrastructure remains a priority. A critical factor is that Bangladesh has some of the most underdeveloped telecommunications infrastructure in the world. Given its 150 million population, the country has limited capacity to support telecom services on any scale. About 80% of the telephone lines are in Bangladesh's four main cities, while 80% of the population lives in some 86,000 rural villages.

Bhutan - A country that preferred to remain isolated from the world from a long time, Bhutan has very recently started to improve its telecommunications capability. To do so it has had to overcome the country's mountainous landscape. Whilst the country had a basic connection to the outside world as early as 1974, with the introduction of trunk calls between Bhutan and India, it was not until 1999 that television, satellite dishes and Internet services started to appear. The tiny country proceeded to invest relatively heavily - to the tune of around US$27 million - in telecommunications infrastructure between 1996 and 2002 to provide the country with a modern fixed line network.

Accurate statistical information on Bhutan is difficult to obtain; there is even a huge variation between sources on what the country's population is.

India - India continues to be one of the fastest growing major telecom markets in the world. Sweeping reforms introduced by successive Indian governments over the last decade have dramatically changed the nature of telecommunications in the country. The country's telecom regulator, the TRAI, says that the rate of market expansion would increase with further regulatory and structural reform. The adoption of Unified Licensing, a change in the Access Deficit Charge regime, increased sharing of infrastructure and coverage of new areas by operators will contribute to ongoing growth.

Fixed-line services, although not as spectacular as mobiles, have been growing solidly. By early 2006, the country has passed the 50 million fixed-line milestone. In 2001, the Indian government threw open the whole fixed-line business to an unlimited number of operators in each of the 21 telecom circles. Prior to this, fixed-line telephony had been the preserve of the state-owned MTNL and BSNL, with only one private company being allowed to compete with an existing state-run player in each circle. VSNL, the former monopoly provider of international telephony, also lost its exclusive status when the market was opened to competition in April 2002.

The nature of the country's telecommunications industry has certainly been changed by the sweeping reforms introduced by successive Indian governments over the last decade or so. In the early stages of change, the structure of the market was frequently criticised, but there has been a healthy evolution through a series of mergers and takeovers among the mobile operators that has produced a welcome consolidation. The 'licensing by circles' policy is generally credited with having established a highly competitive telecoms market. This is certainly benefiting the country. With what is now seen as a well regulated commercial environment and with plenty of growth potential, India has become an attractive market for foreign investment. Of course, regulatory reform is very much regarded as a 'work in progress'. The government has been pushing to further restructure the telecommunications regulatory regime.

The Maldives, with its relatively small population of 300,000, can rightly claim an efficient, up to date national telecommunications system, despite it being spread over a large archipelago of islands. Dhiraagu, the country's monopoly telco, has invested considerable effort to ensure that there is now a complete and effective telephone service covering the whole country. As well as operating the fixed-line network, the company has also been operating an extensive mobile service and is an Internet Service Provider (ISP). Dhiraagu's monopoly was officially set to run out in 2008, but the government was keen to open up the market earlier than that and this was starting to happen progressively.

Nepal - Nepal is among the poorest and least developed countries in the world. Amid what has been an unsettled political climate that erupts as a major problem from time to time the country has been moving steadily towards a more liberalised telecom market. Positive regulatory changes in the telecom sector have been implemented, including the incumbent telco losing its monopoly status in the market.

By April 2006, over 170 operators had been authorised to provide a wide range of telecom services, including two for basic telephony and two for mobile telephony. The expansion of telephone services has not been able to keep up with the growing demand, an estimated 50% of demand for telephones remaining unmet. The biggest challenge has been in providing rural services. This area has been neglected as the level of investment over recent years fell well short of what was required. More than 60% of telephone services are concentrated in the capital Kathmandu. The ITU reported that there was a static waiting list of over 300,000 customers seeking fixed line services.

Pakistan - After a period in which the country slowly transitioned from one dominated by a regulated state-owned monopoly to a comparatively deregulated competitive structure, Pakistan's telecom sector had finally begun moving and looked set for an era of phenomenal growth. Fixed-line penetration stood at a low 4% (5.9 million lines) in early 2006, with plenty of room for further expansion. The government is continuing to pursue its targeted national teledensity of 7% (around 10 million lines) by 2010. To achieve this target, around one million additional lines need to be installed every year.

An important aspect of reforming the telecom sector was the privatisation of PTCL (Pakistan Telecom). In June 2005, the UAE operator, Etisalat, submitted the highest bid of US$2.6 billion for a 26% stake in PTCL. Despite lodging the winning bid, the acquisition took a further six months to complete after a dispute over payment terms arose almost jeopardising the sale.

Sri Lanka's Sri Lanka has been demonstrating considerable determination in its efforts to develop the country despite its ongoing political problems. With a modern progressive telecommunications sector high on the list, the sector looks to be well positioned for vigorous growth. The country's fixed-line teledensity was approaching 6% and mobile penetration was over 17% in early 2006, with annual growth of the mobile sector running in excess of 50%. At the same time, the strong growth looks very much like it was set to continue. There are a range of major initiatives being put in place that are set to give a boost to the building of national infrastructure and open the market to even more competition. Sri Lanka Telecom progressively losing its monopoly on a range of services has led the way as the market is made more interesting for new players. It is well recognised by the government that for economic well-being the country needs the ready availability of Internet, e-finance, e-commerce and all the other communications facilities products that play an important role in global commercial activity.

TABLE OF CONTENTS

1. EXECUTIVE SUMMARY

• 1.1 Key developments
  • 1.1.1 General
  • 1.1.2 Regulatory
  • 1.1.3 Infrastructure

2. OVERVIEW OF THE TELECOMS MARKET

• 2.1 Overview
• 2.2 Telecommunications infrastructure
• 2.3 Regulatory
  • 2.3.1 Market deregulation
• 2.4 Fixed-line services

3. AFGHANISTAN

• 3.1 Overview of Afghanistan's telecom market
• 3.2 Fixed network operators in Afghanistan
  • 3.2.1 Afghan Wireless Communications Co (AWCC)
  • 3.2.2 Afghan Telecom
• 3.3 Telecommunications infrastructure
  • 3.3.1 Overview
  • 3.3.2 Infrastructure projects

4. BANGLADESH

• 4.1 Overview of Bangladesh's telecom market
• 4.2 Fixed network operators
  • 4.2.1 Bangladesh Telegraph and Telephone Board
  • 4.2.2 Bangladesh Rural Telecommunications Authority (BRTA)
  • 4.2.3 Sheba Telecom
  • 4.2.4 WorldTel
  • 4.2.5 Basundhara Communications Network Limited (BCNL)
  • 4.2.6 Other licensees
• 4.3 Telecommunications infrastructure
  • 4.3.1 National telecom network
  • 4.3.2 International infrastructure
• 4.4 Data market
  • 4.4.1 Data infrastructure and services

5. BHUTAN

• 5.1 Overview of Bhutan's telecom market
• 5.2 Telecommunications infrastructure
  • 5.2.1 National
  • 5.2.2 International

6. INDIA

• 6.1 Overview of India's telecom market
• 6.2 Growth forecasts
• 6.3 Foreign investment
• 6.4 Universal service
• 6.5 Analysis - structural separation - Bharti leads the way - May 2006
• 6.6 Fixed network operators
  • 6.6.1 Overview of the operators
  • 6.6.2 International operators
• 6.7 Telecommunications Infrastructure
  • 6.7.1 National telecom network
  • 6.7.2 National infrastructure
  • 6.7.3 International infrastructure
  • 6.7.4 Infrastructure developments

7. MALDIVES

• 7.1 Overview of Maldive's telecom market
• 7.2 Telecommunications infrastructure
  • 7.2.1 Domestic
  • 7.2.2 International
• 7.3 Fixed network voice services
• 7.4 Data market
  • 7.4.1 Maldives Government Network

8. NEPAL

• 8.1 Overview of Nepal's telecom market
• 8.2 Nepal under emergency rule
• 8.3 Basic telephone service providers
  • 8.3.1 Nepal Doorsanchar (Nepal Telecom Co Ltd)
  • 8.3.2 United Telecom Ltd (UTL)
• 8.4 Telecommunications infrastructure
  • 8.4.1 National telecom network
  • 8.4.2 International infrastructure

9. PAKISTAN

• 9.1 Overview of Pakistan's telecom market
• 9.2 Earthquake - October 2005
• 9.3 Fixed Network Operators
  • 9.3.1 Major fixed-line players
• 9.4 Fixed network voice services
  • 9.4.1 International voice traffic
  • 9.4.2 International prepaid calling card services
  • 9.4.3 Value-added voice services
• 9.5 Telecommunications infrastructure
  • 9.5.1 National telecom network
  • 9.5.2 International infrastructure
  • 9.5.3 Submarine cable networks
  • 9.5.4 Infrastructure developments
• 9.6 Data market
  • 9.6.1 Data infrastructure
  • 9.6.2 Data services

10. SRI LANKA

• 10.1 Overview of Sri Lanka's telecom market
• 10.2 Tsunami disaster
• 10.3 Fixed Network Operators
  • 10.3.1 Overview of operators
  • 10.3.2 Sri Lanka Telecom
  • 10.3.3 Suntel
  • 10.3.4 Lanka Bell
  • 10.3.5 Lanka Internet & Tritel services
• 10.4 Telecommunications infrastructure
  • 10.4.1 National telecom network
  • 10.4.2 International infrastructure
  • 10.4.3 Telecom City Project
• 10.5 Data market
  • 10.5.1 Overview
  • 10.5.2 Integrated Services Digital Network (ISDN)

11. GLOSSARY OF ABBREVIATIONS

• Exhibit 1 - Major telecommunications players
• Exhibit 2 - ISRO satellite network - March 2006
• Exhibit 3 - PTCL subsidiary companies
• Exhibit 4 - Joint ventures and affiliated companies
• Exhibit 5 - Telecommunications system operator licensees
• Exhibit 6 - External Gateway Operator (EGO) licenses
  • Table 1 - Fixed-line subscribers (selected markets) - March 2006
  • Table 2 - Telephone network statistics - 2005
  • Table 3 - Fixed-line subscriber growth and teledensity - 1994 - 2005
  • Table 4 - Distribution of telephone lines - 2002
  • Table 5 - Fixed lines installed - 2002 - 2005
  • Table 6 - Telephone network statistics - 2005
  • Table 7 - Fixed telephone line targets and teledensity - 2010; 2025
  • Table 8 - Fixed-line growth and teledensity - 1995 - 2005
  • Table 9 - Telephone network statistics - 2005
  • Table 10 - Fixed lines in service and teledensity - 1995 - 2005
  • Table 11 - Fixed-line services vs mobile services and penetration - 2005
  • Table 12 - Telephone network statistics - 2005
  • Table 13 - Telephone services to villages - December 2005
  • Table 14 - Fixed-line basic services* by operator - December 2005
  • Table 15 - Fixed-line growth and teledensity - 1995 - 2006
  • Table 16 - Growth of VPT scheme - 2001 - 2005
  • Table 17 - PCOs in operation and market share by operator - 2005
  • Table 18 - Fixed WLL subscriber growth - 2004 - 2006
  • Table 19 - International undersea cable capacity - 1997 - 2005
  • Table 20 - Telephone network statistics - 2005
  • Table 21 - Fixed lines in service and teledensity - 1995 - 2005
  • Table 22 - Fixed-line subscribers - 2004
  • Table 23 - Telephone network statistics - April 2006
  • Table 24 - NTC rural penetration levels - April 2006
  • Table 25 - Fixed-lines in service and teledensity - 1995 - 2006
  • Table 26 - Telephone demand forecasts - 2007; 2012; 2017
  • Table 27 - Telephone network statistics - 2005
  • Table 28 - 'Fixed' licences issued by PTA - March 2005
  • Table 29 - Growth in Public Call Offices - 1999 - 2005
  • Table 30 - Fixed lines in service and teledensity - 1991 - 2005
  • Table 31 - WLL operator market share - 2005
  • Table 32 - National network status - September 2005
  • Table 33 - Telephone network statistics - September 2005
  • Table 34 - SLT subscribers - 1999 - 2005
  • Table 35 - Suntel subscribers - 1999 - 2005
  • Table 36 - Lanka Bell subscribers - 1999 - 2005
  • Table 37 - Fixed lines in service and teledensity - 1995 - 2005
  • Table 38 - WLL subscribers - 1996 - 2005