2. BR
RESEARCH
THE TEAM
Sohaib Jamali
ResearchEditor
Ali Khizar Aslam
Head of Research
Murtaza Khaliq
Creative Head
Rabia Lalani
Research Analyst
Zuhair Abbasi
Senior Analyst
Hammad Haider
Senior Analyst
Sidra Farrukh
Research Analyst
Naseem Waheed
BR ICT REVIEW 2014 | December 16, 2014
Contents
FROMTHEEDITOR’SDESK
PAGE 3
APPRECIATINGCRITICALITYOF
INDUSTRY’SDEMANDS
Anusha Rahman, Federal Minister
for IT and Telecom
PAGE 4
THEICTOPPORTUNITY
Ali Khizar
PAGE 5
USINGTECHNOLOGY
FOREDUCATION
Iqbal Mustafa Khan
PAGE 28
EVOLVING
CONSUMERPROTECTION
Muhammad Altamash
PAGE 30
ISPAKISTANREADYFOR
SOCIALMEDIA?
Zuhair Abbasi
PAGE 29
TECHISNOPANACEA
FORDEMOCRACY
Sohaib Jamali
PAGE 31
USINGSMARTPHONESTO
PROMOTEGOODGOVERNANCE
Dr. Umar Saif
Chairman, Punjab Information
Technology Board
PAGE 25
TECHNOLOGYFOR
DEMOCRACY
Emrys Schoemaker
Director and co-founder,
iMedia Associates
PAGE 26
ADDRESSINGE-GOVERNANCE
Raúl Zambrano
Global Lead and Policy Adviser ICT for
Development and e-governance team at
UNDP’s Democratic Governance practice
PAGE 27
ADDRESSINGPOWERWOES
THROUGH‘SMARTGRID’
Sidra Farrukh
PAGE 22
MFS:OPPORTUNITIES
ANDCHALLENGES
Omar Moeen Malik
PAGE 23
SCALINGUPRETAIL
FINANCIALSERVICES
Rabia Lalani
PAGE 24
PAKISTANISTART-UPS
MAKINGPROMISINGSTART
Kalsoom Lakhani
Founder & CEO, Invest2Innovate (i2i)
PAGE 21
E-COMMERCE:PAKISTAN
ISLATETOTHEPARTY
Monis Rahman
PAGE 18
THEPHENOMENONOF
TECH-INCUBATIONINPAKISTAN
Nabeel A. Qadeer
PAGE 19
PAKISTANENTREPRENEURSHIP
ECOSYSTEM
PAGE 20
“CLOUDSERVICES:NODARKCLOUD
HOVERSOVERSMEPROSPECTS
Naseer Akhter
founding President and CEO, InfoTech
PAGE 16
“EXPORTSSHOULDREFLECTIT
INDUSTRY’STALENT”
Asim Shahryar Husain
Managing Director,
Pakistan Software Export Board
PAGE 17
“PAKISTAN’SVOICELESS
ITINDUSTRY
NEEDSADEDICATEDMINISTRY”
Salim Ghauri
CEO, NetSol Technologies Limited
PAGE 15
FOCUSONICTUSAGE
Nadeem Aslam Malik,
Country Director of Huawei
Technologies Pakistan
PAGE 12
FIXINGTHEFIXED
INFRASTRUCTURE
Hammad Haider
PAGE 14
PAKISTANHAS
PHENOMENALITTALENT
Navid Qazi
Country General Manager for Pakistan,
Cisco Systems
PAGE 13
SPECTRUMSIZE
DOESMATTER
Parvez Iftikhar
PAGE 9
DAYSOF
PLAIN-VANILLAPSTNOVER
Walid Irshaid
Group head, PTCL Company & Ufone
PAGE 6
“FORTELENOR,
3GISNOTASPRINT…”
Michael Foley
CEO, Telenor Pakistan
PAGE 7
“CHINAMOBILETOINVESTOVER
$1BILLIONIN3G/4GWITHIN3YEARS”
Ge Jianbao
Acting CEO and Chief Financial Officer,
China Mobile Pakistan (CMPak)
PAGE 8
ENTERMOBILEBROADBAND
KEYTELECOMINDICATORS
CONNECTIVITYENABLERS
SOFTWARESERVICES
TECHNOLOGY,ENTREPRENEURSHIPANDCONVERGENCE
ICTFORDEVELOPMENT
3. `Technologicalhaves
and`technologicalhave-nots’
From Editor’s desk
The popularity of ICTs (information and communication
technologies), an umbrella term for any communication
device or application encompassing broadcast media,
cellular phones, computer and network hardware and
software, satellite systems, etc, and their use among people
all over the world constitutes a profound question in
relation to “technological haves” and “technological
have-nots” particularly in a developing country like
Pakistan. In its country report on Pakistan in 2005, a
leading Western publication had made some thought
provoking observations with regard to the rise of telecom
industry in Pakistan. According to it, although poverty has
manifested itself in this South Asian country of teeming
millions in a variety of ways, a cellular phone, a modern
device, is no longer the preserve of the rich; it is even
owned by a beggar in any dirt-laden street of any big or
small town of Pakistan. This was, of course, a sardonic but
an intense comment on the all-pervasive onslaught of
technological advances that owe their birth to new ideas,
conceptual leaps and paradigm shifts. This point brings to
one’s mind the never-ending “advances” in communication.
For example, you cannot surf the web and watch videos
online without noticing the rather nasty presence of pesky
pop-up ads. Business Recorder website, too, is characterized
by such features. Owing to a technological advance,
however modest, small programs that are available free for
download and that equip you with a gear to ward off the
display of all such “irritating” ads with a touch gesture on
the mouse of your PC or smart-phone.
That technology does matter is a fact that has found its
best expression in China’s paradigm shift from its policy of
resistance to technology with a view to protecting the jobs
of as many people as possible in a country of hundreds of
millions living under the stagnant and suffocating spells of
communism. Its technology-driven path under the
stewardship of Deng Xiaoping from the late 1970s onwards
turned China into a global manufacturing power house. A
country that was primarily known as an agri-based
economy is now seeking to compete with the West in
technological advances, although not all of its achievements
are in the sphere of ICTs: it has deployed, for example, the
world’s first ultra High Voltage DC and AC lines; it has
begun to export fast train technology with the world’s
fastest train and the world’s largest high speed railway
network; Beijing is rapidly deploying supercritical and
ultra-supercritical coal combustion plants; it has over 30
nuclear power plants under construction. The list of China’s
achievements is indeed very long. Insofar as ICTs are
concerned, China has developed the world’s fastest
computer. Moreover, the world, at present, is observing a
huge smart-phone boom in China. China Mobile is said to
be mulling manufacturing this communication device in
Pakistan as well.
ICTs are making their presence felt in a variety of areas,
including finance, education, healthcare and libraries. The
global finance, including banking, is heavily dependent on
ICTs. The banking sector in Pakistan has numerous success
stories in the realm of ICTs—online banking is one such
story. The e-government objective, however, still appears to
be a distant dream for the penetration of ICT in this huge
territory, or perhaps the largest virgin lands, has been found
to be less than significant. The auction for 3G/4G technol-
ogy in Pakistan, though a considerably belated affair,
promises a higher connectivity with the world and therefore
the realization of desired results, but in due course. The
proponents of ICTs are required to lay greater focus on
social sector with a view to lessening, if not fully eliminat-
ing, the gap between “technological haves” and “technologi-
cal have-nots”. They must not lose sight of the appalling
literacy numbers in a population of 180 million plus. They
must employ and promote the modern ICT devices and
tools with a view to not only vastly improving the working
and functionality of the corporate world but also giving
birth to a hope that ICTs will act as a catalyst for a wider
debate about efforts aimed at lifting the mass of humanity
from abject poverty and deep quagmires of ignorance. All
stakeholders, particularly the PTCL, are required to play
their role towards achieving the highest possible ICT
standards and services in relation to Pakistan’s economy,
politics, social and cultural development. Dear reader, the
BR ICT Review by Business Recorder’s research wing, BR
Research, is an effort, however humble, towards realization
of this very objective in a country where politics has a clear
precedence over economic imperatives or anything else.
Some of the current dynamics and aberrations in the
country’s politics and economic policymaking, for example,
owe their existence to the ICT-driven social transformation.
03
BR ICT REVIEW
4. 04
INTERVIEW ANUSHA RAHMAN IT & TELECOM MINISTRY
Appreciating criticality of
industry’s demands
“T
When BR Research recently sat down with Anusha Rahman, Pakistan’s Minister of state for IT and Telecom, she had just
returned from South Korea where Pakistan had been elected executive member on the International Telecom Union’s
premier administrative council that oversees global ICT policies and strategies. Anusha seemed elated and attributed that
achievement to Pakistan’s local progress in last sixteen months under her party’s government.
here was nothing significant that happened on the
local ICT scene between 2008 and 2013,” she started
off. “We had lost the ITU seat in 2010. We had lost the
election last time. With this election, Pakistan is now part of the
decision-making for worldwide ICT policymaking”.
New Policy Framework
While international recognition is all good, there is still a lot of
work left to be done at home. To begin with, the telecom policy
framework remains outdated. Anusha and his team have been
working on a draft policy framework, so BR Research asked the
minister about the overall drift of the policy-in-making:
“The new framework will give our vision for the next five
years. For the last one year, we have been working on this new
framework and we have brought in quite a few new things in line
with the evolving ICT dynamics. Among the salient features, we
have added spectrum farming and spectrum policy. We want to
give a message to the industry that if there is demand for
spectrum, we’ll make sure that the supply is not scarce. Also, if
you are going to just sit on the spectrum, now there will be
possibility of questions being asked of their utility,” she said.
“Then we have touched upon cross-border traffic and transit
traffic through Pakistan. Our policy focus will be on the ubiquitous
development by reaching out to the under-served and un-served
areas, and the women and the youth segments through the
resources of those areas. For that purpose, the Universal Service
Fund will go in a big way,” she dilated on the priorities.
At the time of the interview, she told BR Research that the
government had completed the consultations and incorporated
the feedback. The policy was expected to be announced
somewhere in late November or early December. “What the
election to the ITU body highlights is that Pakistan must seek
policy consistency. If there is continuity, Pakistan already is an
attractive market of 190 million people, with 60 percent of the
population below 25 years of age,” she observed.
Universal Telecentres
The minister gave a strong impression that women and youth in
the left-out areas will be the primary focus of USF from now on.
“We will make Universal Telecentres across Pakistan – about 500
in the beginning, for which a substantial amount of work has
already been done, in partnership with the private sector. These
UTCs will be the main source of e- and m-services for the people.
The USF subsidy will provide the licensed operators with the
capex for OFC connectivity and office space for these UTCs.”
So, what kind of services are we looking at? “We intend to
take Nadra there, where its kiosks can provide citizen services
like CNIC and passport issuance. We will connect each UTC
with the Virtual University and provide 10-12 computers in each
one of the centers. We will lay down the infrastructure and
encourage other universities to be a part of e-learning, too.
Operators will also be able to issue their Sims from those centers
through a biometric verification,” she explained.
Between USF and ICT and R&D Fund, there are about Rs100
billion, according to her, and that money will be put to good use.
Ministerial Priorities
Every minister ought to have priorities. What would Anusha be
focusing on during her term? “I am going to concentrate on big
impact projects. My two focus areas are mobile broadband and
optic fiber connectivity. In mobile broadband, we are expecting
$1.3 billion in coming three years as investment in rollout of 3G and
4G services – that is in addition to $1.2 billion already made on
four 3G and one 4G licenses. Pakistan has already laid 4000-5000
kilometers of OFC in Baluchistan, plus we are moving in Khyber
Pakhtunkhwa, for having core infrastructure owned by Pakistan.
Then there is a project for broadband provision in colleges, where
we have selected about one hundred institutions.”
She said her prime policymaking agenda was to help catalyze
job-creation, especially for women and the youth. “I am also
concentrating on finding a way through which ICT can empower
women, for instance, by enabling them to work from home. We
intend to bring special curriculum for training girls in ICTs,
which we hope to bring about through the Universal Telecentres
and other projects. That has already happened in Nigeria, and I
am talking to them to introduce a framework for
self-employment for girls in far-flung areas.”
What is the minister doing on the e-government front?
“MoIT is spearheading e-government and we are already in the
process of replication of e-government programme in 28
ministries, of which 12 are done. The aim is to promote efficiency
and transparency in the domain of government services. The
programme will be finished by December end. We have now set
up a National Information Technology Board – a department
that is the focal point for implementing all e-government
initiatives,” she said.
As for the software industry, she said that the MoIT had
initiated the process of accreditation and supplication of Pakistani
IT companies and ISO-9001 and ISO-27001 standards at subsidized
rates, which will enhance the credibility of Pakistani IT companies.
For Islamabad, MoIT has an agreement with Korean Exim for
spending $50 million in building a technology park. The ministry
plans to make, through public-private partnership, more technol-
ogy parks in Karachi and Lahore.
“But this is not enough. We will continue to work hard.
Technology is an enabler. We can provide the infrastructure, but
other factors need to be there. That’s why our model is that of
public-private partnership,” Anusha maintained.
Local Manufacturing
Anusha mentioned that encouraging local manufacturing of
telecom equipment and devices was among the government’s key
priorities. “I have spoken a lot about it as an opposition member.
Just giving the market mobile broadband is not enough. What is
important is that we provide the whole ecosystem. In this case, the
end-to-end capability is a smartphone, which is an expensive item.
4G handsets are a rarity in this market. So we have now actively
started work on a framework for enabling local manufacturing and
to make it attractive. We have already sent out the consultation
document to ministry of industries and FBR. The framework will
soon be offered and available to everyone.”
Will the framework be for device assembly or component
manufacturing as well? “It includes everything. We will
announce special incentives for local manufacturing. We hope to
have an ecosystem such that we don’t have to import even a small
pin,” she said. “But it won’t happen overnight, because Pakistan is
not even on the telecom manufacturing radar right now. At this
point in time, China Mobile, which has won the 4G license, has
huge interest in local manufacturing. What China Mobile is
offering to do – I don’t know to what extent that will materialise
– but their initial interest is to bring the entire ecosystem of
mobile handset manufacturing to Pakistan. They are asking for
500 acres of land and are looking at technology transfer.”
Next Spectrum Auction
Is there an auction timeline for the remaining two licenses?
“There is already demand for more spectrums from existing
operators. But we would like to do it in an optimal fashion. For
the remaining 4G license, there will be a natural course and we
have to wait till the 4G market slightly picks up. I personally
would like to see more participation in the next round,” the
minister shared.
High Taxes
What about the telecom tax burden on consumers and operators,
which is one of the highest in the world? Anusha said that MoIT
has been in correspondence with the finance ministry on this
issue. “I consider myself responsible for the growth in the
telecom industry. We do not consider telecom is just about
creating a revenue-generation artery. We want to give industry
the opportunity to grow. And that’s why tax rationalisation is on
our agenda. Hopefully, in the months to come, we will have some
tax rationalisation measures,” she concluded.
BR ICT REVIEW
Interview by Sohaib Jamali and Hammad Haider
5. he benefits of deregulation, privatisation and technological advancement cannot be more
visible in any Pakistani industry than in information and communication technology (ICT)
where a monopolistic telecom structure has been gradually transformed into a promising
regime over the last decade. The 2003-04 telecom deregulation helped usher in policies that attracted
many new players in cellular, local loop, broadband and LDI sectors. In a decade, cellular subscriptions
have jumped from 5 million to about 140 million!
The magic of competition and technology has created enormous consumer surplus from the
days when you had to maneuver for getting a landline connection – to present day when free SIM
cards can reach your doorstep by simply pressing a few buttons. The voice service is dirt cheap today,
so are the feature handsets. The telecom revolution has also brought corporate culture to cities like
Lahore and Islamabad, generating tens of thousands of jobs all around the country. It is pertinent to
mention that in the high growth era of 2003-07, this industry attracted the highest amount of
foreign direct investment.
On the flipside, producers could not extract the juice to their liking as bottomline profits of
majority of the six cellular operators remained in red for most of the time. Similarly, PTCL’s profits
shrunk significantly in the immediate post-deregulation period, which was in part due to the effects
of mobile substitution on the firm’s core landline business.
In the cellular sector, post-2008, the valuation of some of the operators gradually reduced to a
fraction from their peak in 2008, which explains a lack of merger and acquisition in a tough
competitive environment.
Transition to Data
The cellular voice segment had saturated around a couple of years back and fresh investments
stalled. The natural transition to data, which was long coming, finally happened this year after
successive years of budgeting for the 3G telecom licenses. Now that can create ample space for other
segments of ICT to come in big way in the market leading to the optimization of vacant spectrum.
According to a World Bank study, a 10 percent substitution from 2G to 3G penetration increases GDP
per capita by 0.15 percent. That is the promise that needs to be enchased.
The rollout of 3G and 4G services is expected to be a game-changer. In order to reap benefits,
telecom authorities and the regulatory watchdog have to learn from our own past and the mistakes
the neighboring countries made in post-third-generation era. Pakistan has to have policies that
incentivises players to adopt cost-sharing strategies. In earlier days, the egos of operators whilst lack
of oversight by the regulator resulted in over-investment in cellular sites, which could have
environmental hazards as well. Fresh investment is required to successfully roll out 3G network
across the country and the optimal way is to share the infrastructure either by renting to each other
or creating an intermediary company to do so.
In data outreach, cellular coverage is just a fraction yet it may turn out to be a high margin
service for the segment. The main emphasis of policymaking should be aimed at enhancing
broadband connectivity, which, so far, only PTCL has been instrumental in. The coming years have
to be focused on broadband expansion – experts are eying internet users to reach 100 million mark
by 2020 from 30 million today.
Useful Connectivity
The application of broadband connectivity on public management, private sector expansion and
especially entrepreneurship is already visible. The automation process led by authorities like Nadra is
paving way for documenting the social vitals and will go a long way in effectively countring crime
(terrorism), enhancing tax-to-GDP ratio and improving social service delivery. Then the work being done
at the Punjab Information Technology Board is exemplary for other provincial governments to improve
the governance system, healthcare facilities and education to name a few. There are now a number of
incubators in various universities that are primarily feeding budding entrepreneurs in the ICT space.
There is no dearth of talent in Pakistan as every now and then young boys and girls are in the
news for making a mobile application or some other solution in the IT regime. Freelancers are
estimated to contribute $700 million per annum in exports. There is a need to institutionalize this
freelancing business where the experts can provide funds, business and avenues so the talented
youth can achieve scalability.
ICT is one sector that can help achieve the goal of export diversification; it can also help meet the
growing import needs of an economy. The need is to have fiscal incentives for various branches within
the ambit of ICT to grow. On the flipside, the FBR is squeezing revenues from whatever documented
sectors that come in its way rather instead of focusing on expanding the tax-base. That is why telecom
has the highest incidence of taxation when direct and indirect taxes are included. This may hinder the
growth of next-generation services and hurt data adoption among low-income segments.
Financing the Next Phase
Operators have done a good job when it comes to deploying cellular connectivity across the country.
They are now making heavy investments in rollout of 3G and 4G services. But the basic yet critical
infrastructure – especially fiber optic (read more on this in publication in the following pages) –
needs to be strengthened, something which operators alone won’t be able to do given the high capex.
Here, a need for improving the performance of the telecom industry-funded Universal Service Fund
(USF), which was created in 2007 for enhancing the outreach of ICT services in the far-flung areas,
remains obvious.
The incumbent federal government has conveniently deployed the USF money – according to
some estimates, USF and ICT and R&D Fund’s collections have now swelled to Rs100 billion combined
– to finance fiscal deficit last year. That has dampened the confidence of operators on the government
and regulatory bodies. That needs to change. Operational and financial autonomy of these funds is
paramount and government must pay heed. USF needs to pick up the challenge, bring the last mile
connectivity and have adequate backhaul fiber optic infrastructure.
The government also needs to continue the tax break regime for software exports, which is
expiring in 2016. There is a risk that if the measure is not extended for, say, another ten years, and
major software houses may keep the revenues generated from their overseas clients abroad in
favorable tax economies like Dubai, Singapore or elsewhere.
The revolution in data can have multifold benefits ranging from generating foreign exchange,
enhanced GDP growth, higher tax revenues to employment generation and better socioeconomic
service delivery. The foremost benefit would be in better public service delivery followed by the
evolution of healthcare and education. A patient can have CT scans in Mardan, which in Karachi a
senior medical practitioner can prescribe from his or her clinic, thus raising the doctor to patient ratio.
A farmer can benefit from an innovation technique deployed in New Zealand to have similar benefits in
Sahiwal. Similarly, vocational training can be done remotely and students having access to virtual
educational academies can easily benefit from what is being taught at some of world’s top universities.
For all that to happen, there is a need to provide the right fiscal, operational and technological
platforms for numerous small players and let them scale up like quite a few did in India. In the years
ahead, you may see mobile set manufacturing (assembling) facilities coming home as China Mobile
is mulling entering this segment. With improved political stability and law and order situation in
Afghanistan, Pakistan can benefit from exporting ICT goods and services to the region. Local
ingenuity is immense. It is time to channel it through the ICTs more effectively.
05
The ICT opportunity
T
BR ICT REVIEW
ARTICLE ALI KHIZAR
The writer is Head of Research at
BusinessRecorder. He can be
reached at: ali.khizar@br-mail.com
6. 06
Days of plain-vanilla
PSTN over: PTCL chief
“P
A new era: new rules?
In his conversation with BR Research, Walid Irshaid, the group head of both PTCL Company and Ufone, noted that as
mobile network operators (MNOs) start offering 3G data services, lessons from the past must not be forgotten.
akistan was among the lowest in the world in terms of
cost per minute - but quality has been worst likewise –
you had to change places to make calls. If we see that
the market for data replicates the voice market, it will be a
disaster. If that happens, first, companies will face financial
difficulties. Then 3G will be of no value to customers due to low
service quality: squeezed margins mean compromised quality.
That should not happen to data,” Walid Irshad started off.
But in the same breath, the PTCL boss noted that he had
reason to be optimistic. “I have looked at various 3G data
offerings so far and feel that operators have taken a quite
reasonable starting point in pricing. There is some learning;
some wisdom that what had been done in voice has damaged
practically all of the industry. Packages launched thus far are
good and prices are reasonable. So I don’t see the kind of
slaughtering we had seen happening right now,” he said,
referring to the voice tariffs that are kissing the floor right now.
Yet he cautions that for mobile broadband adoption to increase,
mobile broadband must come bundled with many value-added
offerings. That will of course impact pricing. “It’s plain vanilla
internet offering right now, because it’s early. So we need to see
where the pricing goes from here.”
Walid emphasized that broadband services need a whole
ecosystem. “Launching 3G and 4G is one thing. Us putting the
infrastructure, trying to do more fiberization, trying to link
Pakistan with outside world is also needed. Then terminal
equipment has to be made available and affordable. Local content
development is also important. All these factors have to be put
together and they need to interact together.”
He suggested that broadband be made a basic right for
citizen to access, and if people want it, the service should be
made available without discrimination. “USF is doing good work
in projects of Telecentres for e-services, rural telephony and fiber
optic program. In the new realities, there is a need to revisit the
outdated USF rules. Let us make the interventions technology-
neutral and take all types of broadband to rural areas facilitate
access. Operators are catalyst and they can help in the
e-government, e-health, e-learning, and e-agriculture projects –
if there is a mandate. Fragmented work has been going on but the
time has come for more consolidation,” he noted.
What’s up at Ufone?
BR Research asked him about the reason why Ufone bought the
smaller, 5MHz 3G spectrum block and skipped the 4G license
altogether. Walid replied by first noting that it was not because
Etisalat was losing faith in Pakistan or the market, which are
both poised to grow. In fact, there is a determination in Etisalat
and government of Pakistan to resolve and close the outstanding
issue of PTCL property transfer, he said.
“Etisalat have been the leading player to bring 3G and 4G in
the regions that they operate. Firstly, we thought launching 3G
before 4G is better for Pakistan, because 4G is just an evolution
over 3G. Secondly, we felt that currently there is no business case
for 4G, because the market is not ready for 4G yet. Broadband is a
completely integrated ecosystem. As 4G is a few years in the
future for Pakistan, we decided it was best to take a 5MHz block
and launch the 3G first. You see, only one operator opted for 4G.
The rest opted for 3G,” he explained his group’s position.
But wait; will the 3G/4G data subscriptions not undercut
PTCL’s rapidly growing broadband operations? Walid offered the
contrary, noting there will be more fixed broadband.
“Substitution, that happened in voice from fixed to mobile,
won’t happen in case of broadband – it has not happened
anywhere. Mobile broadband is great but there is limitation on
consumption, as operators cannot match what we can offer on
fixed broadband. A person will use mobile broadband while s/he
is moving around. But when they come to home or office, they
switch to Wi-Fi at home or office. You cannot consume 10GB on
cellular but that is custom on fixed broadband. I feel that after
3G, appetite will grow for fixed broadband: that will mean more
customers and more usage for our services. 3G will be a catalyst
for more fixed broadband subscriptions,” he reasoned.
Wholesale Bandwidth Market
The 3G operators are all going to need backhaul facilities for
smooth data traffic management. PTCL is a major player in that
wholesale market. Walid emphasised that for broadband, every
element of the ecosystem has to be ready and continuously
upgraded. Walid noted that 3G/4G traffic is going to bring an
explosion in data volume, and that PTCL expects that and is
prepared for the data offensive.
“In terms of capacity, we are ahead of the demand. If
broadband demand is 1 unit, we believe in multiplying it by 10
and then prepare to meet that. We’re revisiting our technologies
and platforms and networks to accommodate our own traffic and
the envisaged 3G/4G traffic. For 3G, we have started working on
our fiber backhauling, and as the fiberization is going on, we’ve
been in discussion with all the MNOs. We are making more
major investments in connecting Pakistan to the outside world.
In 2016, we will see the 4th submarine cable – Asia-Africa-
Europe (AAE1), from China to France – coming into service, with
very high-speed bandwidth,” he explained
What about Voice and LDI?
When asked recent revival in landline telephony, which was once
the legacy-PTCL’s bread and butter, Walid noted that broadband
services have been driving that positive trend.
“People requiring broadband also come to take back their
PSTN line. Then there are other reasons, too. In recent years,
during days of cellular closure, people realized that sometimes
they needed landlines. Better installation and maintenance
works have also contributed in the resumption,” he informed.
But he cautioned that Pakistan’s landline subscription
density is among the lowest in Asia. “We should target a
minimum double the current subscriptions (3.04 million fixed
line subscribers as of September 2013) and we have the capacity
to do that. We have broken the back of the voice substitution
trend, a rarity, but we would be happy when subscription growth
rate picks up,” he said.
Walid declared that the days of plain-vanilla PSTN are over.
“Bundling is the way forward: Broadband; Wi-Fi; voice; TV.
Almost 50 percent of our PSTN customers have broadband – five
years ago, it was between 2-5 percent; that says something about
the trend. Instead of IPTV, we are now aggressively moving on
video delivery on our PSTN lines,” he shared.
Need for Enabling Regulations
When asked to specify the key areas in need of policy interven-
tion, Walid suggested a number of measures through which the
industry can become a catalyst for growth:
“It would help if spectrum is made available to the industry
regularly, that’s one area. Then there are issues like right of way,
and infrastructure sharing, which is still in the talks phase. Fiber
is important because it’s a national asset and investment, so
putting in fiber should be made less cumbersome from regula-
tory standpoint. Then telecom taxes are very high and that hurts
service consumption and industry growth,” he noted.
But the PTCL President was quick to add that the industry is
not asking for favors or concessions or subsidies; it is only
requesting facilitation and supportive regulations that meet the
aspirations of the industry and population. “The industry is
facing extended power cuts even as utility and fuel prices have
gone up in recent years. PTCL is running on an average 15 hours
on backup generators in many parts of Pakistan to provide
services. But we have learned to live with this because whole
country is suffering from this,” he contextualised his point.
BR ICT REVIEW
Interview by Ali Khizar and Hammad Haider
INTERVIEW PTCLWALID IRSHAID
7. 07
L
“For Telenor, 3G is not a sprint…”
When BR Research sat down with Michael Foley, it soon became clear why the gentleman was chosen as the newest CEO of
Telenor Pakistan, which recently obtained a 5MHz spectrum license for 3G services rollout. Foley’s career has spawned roles in
developed markets as well as developing countries in Eastern Europe and Africa, sometimes building networks from scratch.
ike his peers in the industry, Foley is aware of the demons of the past, when intense
price-competition in mobile voice segment led to lower industry margins and uneven QoS.
“In the data market, it is clear that our revenue streams must increase enough to provide
return to the investors. But they also can’t increase out of control so that we are not competitive. It’s a
balancing act. Somewhere in the middle we will find that balance,” he pointed out.
He hopes that the industry would come together in lowering systemic costs through sharing
networks, spectrums, and backbones. “Those are the areas where we do not need to compete, so we can
lower costs to find a balance to offer great products, a great price and then a return to our shareholders.”
When asked about Telenor Pakistan’s pricing strategy at this early stage, Foley explained that it
is critical to create enough trials early on, for which pricing has to be attractive and affordable. “We
have a position that says, ‘Internet for All’, which is fundamental to the economy’s competitiveness.
So, pricing has to be of a nature that allows us to attract clients to our network but also provides a
good return to shareholders. Our pricing is going to be dynamic and very competitive and will offer
great value to customers,” he said.
Telecom Taxes
But such a pricing model cannot achieve its often-competing objectives of customer value and
shareholder return if applicable taxes remain high. Foley agrees, and offers the company’s view that
the level of taxation in Pakistan’s telecom industry is not entirely aligned with the objective of
creating an economic competitive advantage for Pakistan through wide availability of data services.
“Pakistan has the third-highest telecom taxes in the world after Turkey. The industry needs
some help in that area, to get the product to the poor and remote regions. We understand that the
state needs revenue and direct taxation is difficult. But this is an infrastructure-based industry and
we need to get these services to the bulk of people as soon as possible. We had a good discussion
with the authorities on this issue,” he said.
But such issues do not seem to be getting in the way of new investments, yet. Telenor is
currently in the process of working through a three-year plan for the country. “Our investors are
highly committed to Pakistan, and to the team here. They realise that growth will not come from
Europe. Growth will come from the Asian business units, in particular Pakistan that has a great
opportunity with 3G, which is nascent here. So they are all over us, supporting us, and there will be a
lot of investment continuing into Pakistan over the next number of years,” he said with a smile
hinting there will be no more details.
Adoption Rate and Rollout Pace
Foley maintains that 3G adoption in Pakistan is going to be faster than anywhere else in the world,
because the demand is really pent-up. However, he makes it clear 2G data will also be on the menu.
“Data offerings over 2G networks would be entirely sufficient for some clients for a period of time.
We are now pushing data services more aggressively on both 2G and 3G.”
When enquired about rollout plans and their pace, Foley stated that by the end of this calendar
year, Telenor would be offering 3G data services to 60+ cities – a number that far exceeds the official
rollout obligations.
“Official requirement is what it is – our commercial requirement is different. I cannot tell you
the number of subscribers we are targeting, but we expect to have millions of subscribers doing data
on our network over the next two to three years. That won’t happen organically; we’ll have to work
with other players, change the handset ecosystem, and look at commercial levers to get people to try
products.” he explained.
All this is going to be hard work. “We want to make sure there is a contiguous experience on data
networks. Spotty 3G service is not an optimal experience because handoffs sometimes have issues on
data. So we decide to put in a nucleus first and then grow from there. Our commercial, financial and
technological teams actually sit together to build the best customer experience possible,” he shared.
“We have many second and third-tier towns in our rollout plan, besides a lot of our rural area. Just like
voice, data has to be for everyone. Yes, segments exist but our service will not be exclusive,” he emphasised.
If the rollout is going to happen fast (relative to license obligations), should we expect Telenor’s 3G
network to eventually match its 2G coverage, and over what timeframe? By prefacing that no
company can possibly achieve 100 percent coverage, Foley’s guess, upon insistence, is that within
36-48 months, or even earlier, a maximum 3G coverage can be achieved.
But to achieve that, wouldn’t Telenor Pakistan need more spectrum? Foley maintains that while
5MHz would be good enough for a 2-3 years’ timeframe, the company may, at some time in the
future, may go for more.
“The 5MHz spectrum is more than enough for what we need now. We don’t have any desire to
go for more immediately. Let us be very clear that over the last decade, the ability to get maximum
efficiency out of spectrum has gone up very much. We can do a lot with the spectrum we have.”
Building an Ecosystem
While the issue of laying down the mobile broadband highway is being gradually addressed now,
concerns linger about the affordability and quality of vehicles (handsets). Foley agrees that we have a
problem there:
“Things we have under our control are building networks and providing the product. What we
have to work on more than anything else is the device ecosystem. The challenge is that a lot of
devices being pumped into the market do not have any data capability at all, something over which
the industry has little control. We want to get that sorted out fairly quickly so that we can get more
people to try our services.”
But changing the device ecosystem to have data-capable handsets is also an opportunity, he said.
“There will absolutely be some cooperation with the vendors. We won’t be building the
hardware, of course, but we’ll partner with the manufacturers to bring appropriately-configured
handsets to the market; reverse bundle and brand; all those things are on the cards. We are currently
working on which lever to pull first. We can also leverage our ecosystem across Southeast Asia, for
Telenor businesses in this region have faced similar challenges.”
Foley also lays emphasis on providing more than just internet. “We are providing services to our
clients in Urdu and other languages and services for people who can’t read. We have already started
with a mobile application store, where we are allowing people to use credit on their phones to make
in-app purchases. We will facilitate developers to create more applications and products for which
we will continue to encourage young people to come up with content and applications through
Apportunity,” he affirmed.
Despite the 3G rollout hype, Foley resolves that voice business expansion would be a priority for
Telenor Pakistan even in this new phase. He believes that “voice” is absolutely critical, and “it’s the
basic empowerment”.
“Twice in my career, I have built networks in areas where phone service arrived for the first time and
it was transformative for people. If you take away multiple-sim (phenomenon) from the roughly 80
percent teledensity – the jury is still out, but the actual teledensity is probably around 55 percent level –
then that demonstrates a lot of opportunity for growth. Years ago when we entered this market, we
grew from the outside into the cities. We have a large population of rural clients who are served well by
us and there needs to be a lot of growth in those areas. In urban centers, too, growth is possible.”
BR ICT REVIEW
Interview by Sohaib Jamali and Hammad Haider
INTERVIEW TELENOR PAKISTANMICHAEL FOLEY
8. 08
INTERVIEW ZONGGE JIANBAO
BR
“China Mobile to invest over
$1 billion in 3G/4G within 3 years”
Ge Jianbao is the acting CEO and Chief Financial Officer of China Mobile Pakistan (CMPak), the corporate entity of Zong.
He has vast experience of over 20 years in the telecom sector in China after which he joined Zong in February 2013. His
career path comprises many areas within the telecom industry including finance, human resources, strategy, corporate
governance etc. and is acknowledged as a very senior finance professional in the Chinese telecom industry.
Research: How do you see the demand for data services in Pakistan?
Ge Jianbao: The evolution of mobile internet is much slower in Pakistan than it is in
other countries but it is indeed an opportunity for any operator to invest in Pakistan’s
data market. We have seen that it is the youth across the globe which enjoys advancement & new
technologies and consumes information from the worldwide web. A very large percentage of
Pakistan’s population comprises youth. Zong is confident that in the near future there will be a great
demand for data services and we look forward to fulfilling the needs of the ever evolving consumer.
BRR: Long seen as a budget operator in the 2G market, how is Zong position-
ing itself in the mobile broadband era?
GJ: If we talk about the new era, we have very aggressive rollout plans for 3G services. Till date
(since the spectrum auction), we have rolled out our 3G network in more than twenty cities. In 4G,
we are the pioneers and the only operator in the country offering this most-advanced technology.
The launch of 4G has brought the Pakistani telecom industry at par with rest of world within six
months of the licenses being awarded. This is a reflection of our commitment.
We have so far provided our 4G services in 7 major cities, including the federal capital and all
four provincial capitals. So, with Super 3G+4G, we are number one in terms of rollout and customer
numbers. Zong is the fastest growing operator in the country and we recently announced that we
are the first telco to reach 1 million 3G customers.
If you go back five to six years ago, Zong was a very small operator, at the bottom of the chart.
But earlier in the year we became the 3rd largest operator in terms of subscriber base. In the past few
years, we have added more than half of the net additions of customers to the industry. In three years,
we got half of the new market onto our network. This has all been possible as Zong has invested $2
billion in the growth of the industry, alongside our employees’ undying efforts which have helped
shape Zong into one of the main contenders in the Pakistani telecom sector.
BRR: It’s still too early, but how has the market response been to Zong’s data
services so far?
GJ: I think people are now very interested in using the 3G and 4G services. However, it will take
some time to develop the market. We need to focus on the value chain and the entire ecosystem,
which includes networks, handsets, applications, and our products. We would like customers to
immediately start using 3G or 4G services but this will take some time as most of the handsets been
used by customers in Pakistan are not smartphones. Besides, there are very few handsets which
support 4G and those which are available have a very large price tag. However, Zong is trying its best
to fulfill each of the requirements and create a one stop for all.
Zong is not only providing data services, but is also introducing a highest quality, competitive &
low-priced 4G handset, the M811, which is a self-brand owned by China Mobile. We will hopefully
introduce more 3G & 4G handsets into Pakistan. It is essential for us as an operator that the consumer
has the necessary handsets at economical prices to empower the entire Pakistani cellular user base.
Our parent company China Mobile is globally the No.1 4G operator with top-level speed of mobile
broadband in the world. I do believe Zong as a part of China Mobile can bring Pakistan to the same
level as that of China.
BRR: Do you think the continued YouTube ban is negative for 3G and 4G
adoption in Pakistan?
GJ: I think that Pakistan should launch some localized version video service to address needs of
local users. We can provide any support desired through our open platform to let this dream come
true for the people of Pakistan as true enablers and the digital life partner.
BRR: We have heard about China Mobile planning to set up a handset manu-
facturing plant in Pakistan. Could you please share some of the details with
this publication?
GJ: We are coordinating with Chinese handsets manufacturers to start manufacturing handsets in
Pakistan. So far we do not have specific details to share. But I can tell you that we are talking with
the Ministry of Information Technology to work on a plan to bring in such companies. The project
could materialise in more than one way: China Mobile can enter into a joint venture with a handset
manufacturer in China or invite and involve some local player who has interest in investing in this
project in the future.
BRR: Leaving aside the possible future handset manufacturing, how much
investment is China Mobile going to make in its core connectivity business
(Zong)?
GJ: China Mobile intends to invest over $1 billion in Pakistan within three years – that’s just for 3G
and 4G. After that, if we can take benefit of market demand, I think that we will not take back our
profits and we will continually invest in Pakistan. This will all be sponsor equity from China Mobile.
BRR: What would you like the government to do to make your investment more
fruitful here?
GJ: We face a lot of challenges in this market. Due to economic conditions and other issues like
security, power shortage and infrastructure, it is usually not easy for any mobile operator to get
major benefit from the market. For our industry, tax burden is a big challenge. We understand that
in Pakistan there are not many developed industries to provide taxes, but the government should
have some mindset and concept to let our industry have the opportunity to go to the future.
Around 40 to 50 percent of our revenues go into taxes or government fee, making Pakistan as
the country with almost one of the highest tax burdens in the world. One SRO has been deleted as
custom duty increased by 15 percent right after 3G/4G license auction. That has impacted rapid
development & rollout of 3G/4G. The whole telecom industry are expecting appropriate custom duty
rate, so that Pakistan can benefit exponentially. The whole ecosystem around 3G/4G will pay back to
the economy heavily including tax on mobile revenue and more employments.
A localised challenge like power shortage is another major issue for the industry. Then there are
security-related tasks. We have to ensure and appoint guards for the safety purpose of our BTS sites,
which is seldom seen in other countries. This is also a huge cost burden for mobile operators.
However, I think Pakistan is a country with a lot of potential and development opportunity. We
are keen to invest here. The government is easy to approach, they are thinking on the lines on how
to support the investor for enhancement in the country and sooner or later we have to pay attention
to profits. As a member of the executive management in CMPak and an ambassador for Pakistan at
the China Mobile, I shall continue to create opportunities to bring more investment to Pakistan. I
consider myself half-Pakistani, and it is in that spirit I share my concerns.
BR ICT REVIEW
Interview by Sohaib Jamali and Hammad Haider
9. 09
ARTICLE PARVEZ IFTIKHAR
A
Spectrum size does matter
s part of my presentation at e-India 2008,
in New Delhi, when I proudly presented
the slide of regional telecom develop-
ment (see figure) showing Pakistan ahead of all
regional countries, little did I know that it was in
fact the beginning of a long era of stagnation for
telecom sector in Pakistan. Thereafter, where the
teledensity in Sri Lanka soared from 51 percent to
nearly 100 percent, Indian teledensity from 24
percent to 75 percent, Pakistan’s teledensity crawled
from 57 percent to 75 percent.
There had been many reasons of the success
story at that time, but the telecom policies (there
were several: Cellular Mobile Policy, Broadband
Policy, USF Policy, etc.) and deregulation reforms
of 2004 were at the top. Those policies and
reforms were probably the best things that could
happen to a sector in a country. But the policies
were supposed to have a lifespan of five years.
Nothing happened for the next ten long years.
Therefore the biggest achievement of the
present government in the field of ICT will not be
the 3G/4G auction, nor winning the seat in the
administrative council of ITU, rather will it be
the formulation of new ICT policies, in consulta-
tion with the stakeholders. We are not there yet,
but work is underway to formulate a telecom
policy, with the assistance of an international
consultant, funded by the World Bank.
A couple of rounds of stakeholder consulta-
tions have been held and it appears likely that
the new telecom policy will soon see the light of
the day and set Pakistan’s telecom development
on the right trajectory to regain lost glory. Some
of the elements that are important in that
context are discussed briefly below.
BR ICT REVIEW
Parvez Iftikhar is an ICT policy expert who has formerly headed
Universal Service Fund and Siemens Telecom in Pakistan. He has
recently formed a think-tank named ICT Forum, Pakistan. He
writes regularly on www.piftikhar.com and can be reached at
parvez@piftikhar.com
No amount of spectrum is enough, particularly for our last-mile needs. But spectrum should not be too expensive for our consumers, as it is they who pay
for it in the end. The last spectrum auction for 3G and 4G in April, though successful in many ways, did leave much to be desired in that respect. How?
For another few years, wireless broadband would not be available to a majority of our people (more than 60% are estimated to be living in rural areas).
Lax operator license roll-out obligations allow that to happen because government’s focus on getting upfront cash was too high on the agenda. Pakistan‘s
hunger for broadband can be gauged from the claims of cellular operators, that 3G users in cities have crossed 3 million mark – effectively equaling the
number of broadband subscriptions in the country – in less than six months!
Spectrum policy needs other drastic improvements as well, like in spectrum trading and re-use, so that situations are avoided where precious
spectrum is lying unused on one side and some operators are craving for it on the other.
If spectrum is needed for the last-mile, Optic Fiber Cable (OFC) connectivity is needed for the backhaul. It is impossible to provide inclusive development
to our burgeoning population without the help of ICTs. Fortunately, computing power of the devices is doubling every year and prices are tumbling.
According to the well-respected technology research firm IDC, smartphones are already replacing PCs and laptops. On the other hand, videos, which are
the most effective way to teach our villagers, are bandwidth-hungry. Therefore, massive amount of bandwidths will be required in the backbone/backhaul
networks, which is only possible through OFC.
Thus any rapid and inclusive economic development in the future will also need increasing the fiber penetration in the country. That is why it was expected
that ‘Fiber to Tehsil’ program of USF would be followed by a program of ‘Fiber to Union Council’ – for all of the six-and-a-half thousand UCs in the country.
There are all kinds of indirect taxes in Pakistan but the usage tax on telecom is one of the worst. It directly impacts use of ICTs by the poorest sections of the
population. A large proportion of this tax is adjustable in the annual income tax – precisely what the poor cannot do, ironically because they are supposed to
have been exempted from taxes. These days, phones (particularly smartphones) are considered to be productivity-enhancing tools. To discourage their usage
by charging high usage tax amounts to putting breaks on productivity enhancement, and thus detrimental to inclusive economic growth..
The story of USF has been the same as telecom policy. On May 7, 2010, Indian newspaper ‘Business Line’ (belonging to ‘The Hindu’ group) headlined: “Pak
ahead of India in use of Universal Service Funds”. Among other things, Pakistan was among the first ones in the world to start using USF for optic fibers.
Its neighbors followed suit and today they are extending fibers to each of the 250,000 “Gram Panchayats”. Now it’s Pakistan’s turn to emulate.
With nearly a billion dollars in the kitty of USF Pakistan, a little bit of will and some hard work is required. The government announced a program of
500 broadband Telecentres half a year ago. Something is better than nothing if it is not so painfully slow in taking off. As for ICT R&D, little said the
better. After all what can one say about an organisation where, in the last four years, a full-time CEO existed for only half a year? In both cases, the
industry representatives cannot be absolved of their responsibilities.
Doing all of the above would be a big waste unless there is useful content that can educate and enhance the skills of the masses.
Educate not just in the conventional sense but also teach modern techniques in agriculture, farming, livestock, commerce,
fish-farming, growing fruits and preserving them for home and foreign markets, how to setup and run businesses, how to live
hygienically, to name just a few of the endless possibilities.
Content is not the responsibility of IT ministry alone. Other ministries – both at the federal and provincial level – have to
play their part. To give an example, agriculture ministries and departments enjoy substantial rural presence with thousands of
field workers who help, guide, or teach the farmers. Now with ICTs, they can be made more effective by providing them with
smartphones, which are pre-loaded with videos that demonstrate those new ways and methodologies that the farmers need to
learn. In the future, as smartphones and mobile broadband become more pervasive, farmers would be able to download such
videos themselves whenever and wherever required. Such videos can only be prepared by our local agriculture specialists with the
help of public/private sector IT experts, not by IT experts alone.
The government’s role does not end here. There is enough evidence available that ICT development comes when governments
themselves become the biggest users of ICTs. Federal ministry of IT is working to spread the use of e-office in all federal
ministries. But the use of ICTs in the government has to take a quantum leap – from e-office in a handful of ministries and mere
downloading of some forms by the citizens, to complete e-governance. To start with, transactions between the citizens and the
governments should start taking the broadband route. Take the example of branchless banking: why can’t we pay government
dues, like annual vehicle tax or abiana, through mobile banking? Why must we spend our precious hours standing in queues (or
pay someone to do so) to pay government dues?
It is not that no such content-development work for e-governance is being done in Pakistan. Some provinces are doing better
than others. But most of it appears to be carried out in piecemeal manner (look at vehicle number plates of different provinces,
they appear to come from different countries), and none of the work is being shared among the center and/or provinces.
There seems to be no effort to learn from each other, replicate or avoid duplication, and thus waste. There is an on-going
ITU/NIPA (South Korea) assisted initiative of an e-government master plan (of which I happen to be a part from the ITU side) but
that deals only with the federal government. Comprehensive nationwide medium- and long-term e-government plans must be
formulated and implemented by the center and the provinces jointly, which is only possible if the top leadership takes ownership
and pushes for implementation.
Indeed all this would take years, but we need to hasten up so that we can again start proudly presenting Pakistan ahead of others!
Spectrum:
Fiber penetration:
Taxes:
USF and ICT R&D funds:
Content:
e-governance:
12. 12
INTERVIEW HUAWEINADEEM MALIK
BR
Focus on ICT usage
A software engineer, Nadeem Aslam Malik is the Country Director of Huawei Technologies Pakistan, where he has served
for the last four years in Enterprise Business Group.
Research: Tell us a bit about Huawei.
Nadeem Malik: Huawei is a leading global ICT solutions provider with revenue over
$30 billion from over 140 countries. Huawei Technologies currently provides the network
infrastructure for 45 of the world's top 50 operators serving a third of the world's population. One of
Huawei’s strengths is its R&D, on which the firm spends 10 percent of its annual revenues – other
vendors spend about 2-3 percent.
Huawei has recently organised into three distinct business groups. One is the carrier group, which
looks after carrier network infrastructure side, still the largest business. Second is the enterprise
business. And the third division is our device division, where we provide devices like smartphones,
tablets and wingles. The three-word strategy – cloud, pipe and device – are for an era where everything
is residing somewhere and people would be remotely accessing data and applications.
BRR: How do you look at Huawei’s presence in Pakistan?
NM: Huawei has been present in Pakistan since 1999. Pakistan was among Huawei’s first overseas
expansions. Besides the Pakistan-China relationship and the geographical proximity, Huawei saw
that population growth or opportunity growth in Pakistan were the best in the region. Pakistan was
the last one to go to telecom deregulation, so that was a huge opportunity. And Pakistan is a very
friendly country for the Chinese.
In Pakistan, we have about 1,500 full-time employees, 400 of which are Chinese. We are
organised in the country on the same three divisions. We hold leadership in our carrier business (the
network), e.g. Ufone, Mobilink, Zong and PTCL are the major customers. The bread and butter in
Pakistan will remain telecom infrastructure (network).
The second growth driver for Huawei Pakistan will be ICT or enterprise services where we will
be offering cloud data centers, storage, servers, collaborations and videoconferencing to public and
private sectors. If this business grows, the device business will grow automatically. Enterprise is kind
of a driver on both ends, as it has to give end-to-end value proposition to, say, the education sector.
BRR: As an organisation whose bread and butter depends on ICT spending and
usage, how do you see the situation in Pakistan?
NM: There are four pillars or sectors of ICT spending. One is the government, and historically,
major ICT spending has come from the governments across the world. . Second is usually telecom
industry; third is financial service industry, which is 100 percent IT-dependent. Fourth is commer-
cial sector, which includes manufacturing, transportation and SME market.
Now the top tier, the government, has been least adoptive in Pakistan. They have not utilised ICT, I
would say, even upto 1 percent of what should have been. There are major issues with existing ICT spend: it
is too low; it takes too long; it is spent on non-essential project; so whatever is spent is least valuable.
Telecom sector has been the heaviest of the users in Pakistan. They have also come up with
innovations, like mobile financial services. Financial sector is also strong in ICT spending, but their
spending has not reached the potential yet. As a result, the financial density is low, because branch
levels are low and accountholders are very low for a population of 180 million.
BRR: How do you see ICT adoption in industrial sector and at consumer level?
NM: Unfortunately, Pakistani businesses in the industrial or transportation sectors try to copy the
programmes and utilizations in developed economies. They miss the point that it is localisation
which can fulfill the local need.
Commercial utilisation has not been thought out, and the blame goes to regulators, businesses
and ICT providers. Now the payment gateway guidelines issued by the central bank are a major killer
for the ICT industry.
But it is still the business that has to reach out to users. For instance, e-tag lanes must be
compulsory at motorways and all; vehicle registration plates must have RFIDs so that government
can collect tolls and vehicle taxes right away.
Current situation is a major reason why a common person is still not using the ICT services s/he
should already be using. Look at the traffic jams: people still have to go from one place to the other
to do something manually when the same could have been done online or on mobile. The masses
never demanded mobile commerce; it was the provider who took a step, which was brave and
innovative. ATM was not demanded by the customer either. ATM was created as a distinguishable
comparative advantage.
BRR: How are things looking after the introduction of “transformative” 3G and
4G network technologies to Pakistan?
NM: As for us, all three Huawei divisions in Pakistan are seeing growth following 3G auction. There
are opportunities. With mobile broadband, connectivity – along with solar solutions – will help in
off-site solutions like off-site ATMs and E-services kiosks, in remote areas. Huawei is looking
towards key critical projects specifically in the government sector.
But generally, 3G and 4G are a better pipe. It’s just like a motorway compared to the GT Road.
Motorway itself is not going to do anything for you. It all depends on how you use it. If you make
more exits, there will be more communities to connect. Now, how to use the bigger, wider 3G/4G
pipe is not the sole responsibility of the operators, who are already invested. It’s the other sectors,
like the government sector, which can reach out to the public, or the financial sector, which can find
ways to increase the banking population.
It’s the industries that need to be brought on board now as well. Only then can ICTs can create
more job opportunities. Punjab IT Board has been doing great work in the public sector. Among
other things, they have adopted videoconferencing within Punjab government, which is a good step
given the security and mobility issues. However, I think one area which they must prioritize is
increase the internal efficiency of the provincial government.
Pakistan has historically been a data hungry population in terms of online content viewing and
downloads. That’s why we encourage digitization and localization of content and third-party providers.
BRR: How have Huawei smartphones been doing in the local market? What’s
the device strategy after 3G/4G ?
NM: Huawei is number three in the world behind Apple and Samsung, so we do not compete on
price. We are still relatively new entrants in the handset market in Pakistan, which is very promis-
ing. We are very happy with the numbers here. I think smartphones are going to grow and a lot of
tiers of smartphones are going to grow. And by the way, Samsung is my competition, not QMobile.
We do have a device strategy following the 3G/4G auction. All our handsets in the market are now
3G-enabled. We are also partnering with carriers to offer special bundles and packages. But Huawei
is not confined to smartphones only as “device” includes tablets, small 3G and 4G wingles, dongles
and CPEs, which are all part of our offering. Huawei strategy is not confined to the user of 3G
connectivity; it’s about the business connectivity and home connectivity as well.
I think that the largest smart-device user will be our education sector. If you include primary
and secondary education as well, education sector will be one of the largest drivers. So, adoption has
to come from them. What kind of devices do they need? Middle schools will need rugged devices.
University level students will require devices that are bigger and have more horsepower.
What I am saying is there is need for multiple devices in the market, for different segments.
That’s what vendors like us are interested in finding out how this market develops and segments.
BRR: Will Huawei be interested in manufacturing smartphones in Pakistan?
NM:That is a question which I cannot answer at this point in time. There is a possibility. Again, the
penetration of smartphone is currently low in Pakistan. Where the market is heading, we don’t know yet.
BR ICT REVIEW
Interview by Ali Khizar and Hammad Haider
13. 13
INTERVIEW CISCONAVID QAZI
BR
“Pakistan has
phenomenal IT talent”
An electrical engineer, Navid Qazi is Cisco Systems’ Country General Manager for Pakistan. Including last ten years at Cisco,
Navid has around 20 years of experience in emerging markets, working with technology firms including Siemens and Nortel.
Research: How has Cisco organised its business in Pakistan?
Navid Qazi: Cisco has been doing business in Pakistan for about 20 years. Cisco’s
business here is mostly organised around service providers, enterprises and mid-market
customers. Our major customers here are in the telecom industry. Large enterprises like banks,
manufacturing concerns, defense and public sector enterprises are also among our major customers.
Banking industry is a pretty large customer of networking and connectivity.
Dependence on ICT in our daily lives is gradually increasing, allowing people to be more
productive. We are seeing internet-based merchandise market slowly taking off in Pakistan.
Therefore, the consumer segment is one area where we are looking to increase our presence in
Pakistan. If consumers require some compute capacity and software solutions, we can deliver more
elastic, cost-effective cloud based services through our partners.
BRR: What kind of growth has Cisco Pakistan witnessed in the past decade?
NQ: Our business in Pakistan has remained on a growth trajectory. There was a pretty steep
growth in our business here between 2000 and 2007, driven primarily by telecom deregulation.
After that, there had been a period of consolidation where companies saw a flat trajectory. For the
last couple of years, the market has been growing again. A lot of service providers and banks have
been doing technology refresh to catch up with the latest technology.
Our average revenue in Pakistan, over the last decade or so, is around $40 million per annum –
going as high as $72 million. Since Cisco’s business here is geared more towards infrastructure
buildup for large projects, there are periods of high and low revenues over the years in tandem with
the market’s infrastructure spending. But because we have systems integrator partners and resellers
in this market, about 90 of them, every dollar of our sales is roughly about 2-3 dollars in the end
after adding services, importation and allied third-party gear.
Besides local sales, we are also focusing on Pakistan as a market from where we can source local
talent at reasonable cost for our global operations. Cisco Global Business Services now have a
footprint in Pakistan to support our global business operations.
BRR: What kind of growth prospects are you seeing in the next few years after
3G/4G rollout is into play?
NQ: 3G and 4G provide an opportunity to have more meaningful transactions. The ability for
citizens in remote areas to access certain services online can also increase considerably. But there is
a need to augment mobile broadband with some fixed-line connectivity to tier-2 and tier-3 cities and
towns for remote healthcare and education solutions. If you have a basic technology footprint on the
remote end and you make a value chain that is economics-driven, people can cut costs, save time and
get quick service in the social sector domain. You have to energize private sector for that to have
sustenance and innovation.
As Cisco, we are optimistic on Pakistan on two counts. First, Pakistan is an exciting emerging
market and there is a lot of ICT infrastructure to be built up here on basic connectivity level as well as in
advanced technology. Second, now some service-related businesses – such as education and healthcare
– also offer a potential market for connectivity infrastructure. If those two factors are accompanied by
some macroeconomic stability, you could see lot of things happening in the ICT space, extending to
sectors such as transportation, oil and gas, electricity, and manufacturing concerns.
BRR: What are your policy recommendations for fixed infrastructure?
NQ: First up is the fixed-line infrastructure. Same as a road, fixed infrastructure’s ROI is not visible
at the outset but it can deliver great socioeconomic benefits. We really need to increase both
fixed-line infrastructure and usage.
We also need to have a national broadband strategy agreed between relevant stakeholders and
government-led initiatives to catalyze investment. Several other countries are already working on
this considering broadband as a utility. The current draft of new telecom policy does not really
allude to such an environment.
BRR: How do we prioritize fixed infrastructure investment?
NQ: Fixed-line offers the stickiness for a lot of services. It allows you to build a model for large-scale
citizen services. Revenue-generation is not an issue in fixed broadband uptake. It's more to do with
high upfront capex and logistical issues such as right of way. Right now, it is only PTCL that's into
fixed infrastructure expansion – rest of the players are either not sizeable, are not nationwide or
don't have the finances behind them.
In such an environment, governments usually intervene by giving tax concessions and right of
way concessions to anyone undertaking fixed-line infrastructure investment. It can follow the
example of countries like Australia, where they have set up a National Broadband Company that is
mandated to have a minimum percentage of broadband penetration, both fixed and wireless. Such
organisations are catalyzing fixed-line infrastructure investment in about a dozen countries. If we
start today, we can make a major difference in two years.
BRR: USF has a similar mandate but government is sitting on its pile of cash. Is
USF relevant to this intervention?
NQ: It certainly is. I think USF needs to sit together with three or four sectors and try to come up
with a value chain that a) impacts people in underserved and remote areas b) can generate new
business models for entrepreneurs, and c) can increase business for fixed-line infrastructure
providers. That is the theme that we are trying to talk about with the government, private sector and
other CSR-minded organisations.
Now there's a lot of buzz around Telecentres but USF is also trying to figure out what kind of
services they will include. I feel that Telecentres should have five or six modules of government
citizen services and then opened up for the private sector. For instance, secure Telecentres can meet
the need of banking sector that wants to open basic banking; low-staff branched in rural areas.
BRR: You mentioned that Cisco Pakistan’s local talent is helping out in overseas
operations. Can you share more details?
NQ: Cisco has a global business acceleration center which helps introduce new products and
technologies to our teams, partners as well as customers. It’s a business value-addition team on
which Pakistan has its representation through presence in Cisco’s Islamabad and Karachi offices.
Cisco started investing in this unit in Pakistan couple of years back and the feedback from our
corporate unit that handles this programme is pretty encouraging. Right now, I have more people in
my offices working for global operations than for local business.
Cisco really believes in value of talent from Pakistan.
BRR: What are the reasons behind the demand of this local talent pool?
NQ: The quality of talent that we get here is world-class from a cost perspective. We have skilled
manpower. We have a vibrant education system. We really need to scale that a bit further.
In the very short- to medium term, Pakistan’s ability to generate product revenues for companies
like Cisco is significant but there are probably other global markets that would offer bigger promise
in dollar terms. But Pakistan’ ability as a market where you can train, recruit and enable local talent
to galvanize global operations is phenomenal. If we can really get going as an industry in that
direction, more and more technology companies can house some of their operations in Pakistan.
BRR: So what is needed to nudge everyone concerned in that direction?
NQ: I think we need more tier-1 companies to take the first step and have their setups here, not just
to sell to this market but to leverage the skilled workforce available here. At Cisco, we are already on
this path. Most of the big companies in the US that have taken the plunge in Pakistan, like Teradata,
are doing great and their consultants are in large demand. Government can play a big role because
there are, at times, infrastructure vulnerabilities and law & order situation, which makes it difficult
to serve global customers who have to be served at all times.
BR ICT REVIEW
Interview by Sohaib Jamali and Hammad Haider
14. ech folks are fond of drawing analogies. Here comes an
analogy from a non-tech person. In the ICT scheme of
things, fixed infrastructure is like a motorway, smart
devices – smartphones and tablets – are the branded cars and
broadband connectivity is the fuel. Ceteris paribus, a smooth and
extensive road network would enable you to go places. Similar is
the case with fixed infrastructure, which is the backbone of all
types of broadband – fixed, wireless and mobile. Without it,
connectivity might still be there but it will be patchy and spotty,
just as a bumpy country road is inconvenient and costly to your
car’s health and yours.
Fixed infrastructure is a complex beast that is expensive to
tame. It is enabled by different kinds of technologies, but the most
common ones are fiber optic cables (they come in various forms),
submarine connectivity (which are nothing but inter-continental
fiber optic cables), and some form of copper wiring for area-specific,
last-mile connectivity. The term ‘last mile’ is used to denote
delivery of telecom services to retail customer: household or
enterprise. Put simply, fixed infrastructure is required for both
trunk connectivity (inter-district and inter-city connectivity among
operators), and last-mile connectivity. As explained later, Pakistan
is lagging behind on both these connectivity enablers.
Specifically, expert arguments for enhancing fixed-line
infrastructure can be clubbed into two types: strategic and
economic. First, investment in fiber optic networks creates an
infrastructure that is said to be more resilient than wireless
networks, which are relatively easily compromised by cyber
espionage and hacking. Agreed that fixed-line is not failsafe and it
comes with its own limitations, but thanks to technologies like
“self-healing” fiber optic rings, it is now rare to have a cross-country
landline shutdown due to events in one region. In that way, fixed
infrastructure becomes a strategic national asset, helping restore
connectivity in times of distress when physical or cyber space is
under attack.
Second, in the commercial domain, fixed infrastructure has
traditionally been way more powerful than wireless data connectiv-
ity. Underpinned by local fiber optic networks and international
bandwidth, fixed-lines have the ability to provision and transport
high volumes of data, video, and bandwidth at faster rates, which is
essential for large users in commercial and defense sectors.
Companies in the IT sector also need fixed-line connectivity
because of the dependency created by high-quality and round-the-
clock services for overseas business. In the retail (last-mile) market,
fixed-lines enable operators to provide triple-play services – data,
video and voice – to households and small businesses over the same
line via IP networks.
Ground Realities
Like most developing countries, Pakistan seems to be cruising on
its way to become a wireless-only country, particularly in the
last-mile domain. Agreed that fixed-line subscriptions have been
declining worldwide, primarily due to the mobile-substitution
effect and changes in lifestyle (landlines seem as quaint to
Millennials as pagers seemed to Generation-Y folks). But Pakistan is
doing comparatively poor when compared to the developing
country average (see the illustrations). Just half of the country’s
installed capacity of 6 million PSTN lines is under subscription,
even less is expected to be in active usage. Fixed broadband
penetration (DSL, HFC, and FTTP) is even worse, with less than 1.5
million subscriptions as per latest data.
A household analysis on latest official data shows that landlines
are being used in just 10 percent of the households while DSL
penetration is in less than 5 percent of households. If we include in
this numerical Pakistan’s two million+ micro, small, and medium
enterprises and some 30,000 registered corporations – these are the
commercial entities that are traditionally the heaviest fixed-line
users worldwide along with the governments – fixed penetration
further drowns.
So, for an infrastructure that powers a variety of connectivity
needs of a modern economy, what has Pakistan been doing Well,
Pakistan has so far built around 22,300 kilometer long fiber optic
backhaul, as per official data till March 2014. But experts maintain
that is not enough – for both short-haul (last mile) and long-haul
(intercity connectivity) – given the geography and population of the
country. Most of that cable is concentrated in ten to fifteen
metropolises, causing a glut situation where a handful of connectivity
providers compete for the urban connectivity share. Too much fiber
has been lying around in cities for some time now. This locked-up
investment has ensured that there are not enough operators with
adequate investment to take optic fiber to second- and third-tier cities
and towns and rural areas – locations where it is the most needed.
Pakistan has done relatively better in international connectiv-
ity. In the under-sea connectivity with the world, Pakistan already
has operational submarine connectivity via SEA-ME-WE-IV,
IMEWE9 and SEA-ME-WE-V. A new submarine cable linking Asia,
Africa, and Europe (AAE1) will include Pakistan and is expected to
be operational by 2016. Transworld Associates Ltd, a private
venture, has previously connected Pakistan with UAE and Oman
via TWA-1. In recent years, work has been underway on Pak-China
fiber optic connectivity via land, and reportedly, more investment is
coming into that project. But growing data demand in the future
may put pressure on existing backbones.
Countryside Cables
Experts note that the problem of inadequate fiber in the short-haul (last
mile) can be surmounted through the rapid deployment of wireless
technologies like WiMax, EvDO, and fiber-to-the-premises (FTTP). But
to enable wireless technologies to take care of last-mile connectivity,
Pakistan needs to invest in the backbone – fiber optic – in places where
it is currently absent. Put simply, fiber optic infrastructure needs to be
extended to the countryside – and fast!
Wireless-only solutions are tempting, but they will digitally exclude
much of the already-excluded population who will not have access to
ubiquitous and affordable internet for a long time. The government
needs to realize that a pervasive fiber optic infrastructure is essential to
underwrite effective and widespread usage of ICT services and overall
economic development of the country. But fiber optic is a costly and
logistically-challenging investment. One of the oft-cited factors behind
limited rural expansion of optic fiber infrastructure is that after the
state’s market departure post-deregulation, the fixed infrastructure’s
wholesale market is roaming without purpose. This market is not even
an oligopoly anymore; only one large player, PTCL is left that has the
financial wherewithal to fulfill the projects.
The government needs to encourage private sector to roll out
fiber towards rural areas. It could take measures like tax-breaks on
corporate income and duty-exemptions on machinery imports.
Perhaps the most-effective government intervention can happen in
setting the “Right of Way” rules for laying down the fiber optic cables.
If it becomes easier and timely for companies to obtain civic permits
and if reasonable rates are charged per kilometer for laying down
those cables, it can catalyze the fiberisation process in the country. At
present telecom operators are at the mercy of local and provincial
governments, with different sets of rules and rates, and influential
landlords, with no rules, on the way.
No Way Around Fiber
Public-private-partnership is the buzzword – but the telecom
sector’s Universal Service Fund (USF), founded in 2006, already
embodies that collaboration. However, slowdown in the fund’s
performance in recent year and its compromised financial
autonomy seem to have resulted in insignificant progress in laying
down optical fiber to the Union Council level (which was originally
planned). So far, just 5,068 kilometers of fiber has been laid through
USF contracts from a subsidy of Rs6.4 billion.
Surely there is a case that the government should effectively
utilize the USF’s billion dollar kitty to promote fiberisation in the
country’s rural areas. USF’s primary task is exactly to finance the
stubbornly high capex for projects like provision of fiber optic to
unserved and under-served areas. USF needs to take the lead here,
for which the government needs to set it free. Process of USF
contracts and subsidy award needs to be expedited, given the
challenge that lies ahead.
That is not to say that the private sector should sit idly by and
wait for USF contracts. An added opportunity for any fixed-line
infrastructure provider is that after burying those cables, they can
go above and beyond the market of wholesale connectivity sales. As
said earlier, the retail market is largely untapped. Want to be the
first internet provider to millions in rural areas? Go, lay down the
fiber there! Then, in the cities, the fiber-to-the-premises broadband
is a lucrative opportunity for high-speed triple-play services to tens
of thousands of savvy households. Already, affluent neighborhoods
in major cities like Lahore, Karachi and Islamabad seem hooked to
such services. Institutional business, that is dependent on this fiber,
also beckons.
While concluding, let’s just be clear that while mobile
broadband – 3G, 4G and LTE services – are all the rage these days,
even they cannot run without efficient backhaul/backbones
provided by optic fiber cables. To use another analogy, in the
last-mile, 3G/4G are the fast food when compared to the proper
diet that is fixed-line infrastructure. Just as one cannot live on fast
food forever, a country as populated and geographically-scattered
like Pakistan will be unable to fully reap the benefits of ICTs in a
largely wireless-only environment. So, better get in the line for
fixed-line. There is no way around it!
ARTICLE HAMMAD HAIDER
Fixing the fixed infrastructure
T
-
14
BR ICT REVIEW
Fixed-line penetration(%) per 100 people
41
39
26
19
16
13 13
11
3.5
2.31
1.3 0.73
Datasource:ITU (2014figures)
DEVELOPED
EUROPE
AMERICAS
CHINA
WORLD
SRILANKA
ASIA&PACIFIC
DEVELOPING
PAKISTAN
INDIA
AFRICA
BANGLADESH
47.2 46.6
44.8 44.3
45.5 44.6
43.4
42.2 41.2 40.8
12.7 13.0 13.0 12.8 12.4 11.9 11.5 11.2 10.9 10.6
19.1 19.2 18.8 18.5 18.4 17.8 17.2 16.7 16.2 15.8
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Decliningfixed-line subscriptions (per100 people)
Developed Developing World
Data source: ITU
Fixedbroadband penetration (%) per 100 people
Datasource:ITU (2014figures)
DEVELOPED
EUROPE
AMERICAS
CHINA
WORLD
SRILANKA
ASIA&PACIFIC
DEVELOPING
PAKISTAN
INDIA
AFRICA
BANGLADESH
27.7 27.5
17
14
10
8
6
2 1.2
0.63
0.59
0.4
The writer is a Senior Analyst at BR Research.
He can be reached at:
hammadshah24@gmail.com
15. 15
INTERVIEW NETSOLSALIM GHAURI
BR ICT REVIEW
BR
“Pakistan’s voiceless IT industry
needs a dedicated ministry”
Salim Ghauri is the CEO of NetSol Technologies Limited, largest Pakistan-based software firm. He served as Chairman of the
Pakistan Software Houses Association (P@SHA), the leading IT industry forum, in 2014.
Research: How do you see the ICT
landscape in Pakistan?
Salim Ghauri: “ICT” comprises of “IT” and
“Communications (C)”. But in Pakistan, the “C” absorbs
everything and IT goes into background. Yes, the “C” has big
businesses and multibillion dollar investments. That’s why I feel
telecommunications should have been a separate ministry. But IT
should have a separate ministry, too. IT creates jobs, and lots of
them, and earns the country money without expending any raw
materials. IT invests very little and brings huge export revenues.
About 95 percent of IT companies in Pakistan are export-
oriented. We don’t need gas or power. NetSol and others have
built this industry. But this industry is voiceless. We need to be
heard by the policymakers.
BRR: What is the Pakistani IT industry’s export size?
SG: I am really excited by the happenings in the IT industry.
Small companies are generating reasonable revenues from
overseas. The SBP figure of local IT exports is around $350 million
– that’s totally wrong. I would say the overall export revenues are
over $2 billion. The official figure just represents the export
proceeds reported by IT companies like NetSol. We declare every
single penny and document it. About 90 percent of IT companies
are small and they are not reporting their export revenues at all.
This is not just the freelancers. Their export revenues comes as
remittances, through a legal channel, of course, but not properly
documented as such.
There is a lot of IT freelancing work being done from Pakistan
for overseas clients. I encourage that. And I am advocating that the
industry should create a forum to bring the freelancers together
and develop their capacity and promote them.
BRR: People keep referring to the Indian IT scene.
Is the comparison fair to Pakistan?
SG: It’s unfair. India’s market is about three decades old –
Pakistan’s is hardly a decade old. India has a huge resource pool,
which Pakistan cannot match. Then there has been political
stability in India, an indicator where Pakistan is still lacking.
Foreign customers are still shying away from Pakistan – we have
to go to great lengths to bring them here. But we are still hopeful
as an industry. We have the products, the people and the
processes to excel.
I think we need political stability more than any other
industry. We have to go to great lengths to attract foreign clients,
who are affected by instability. Security situation is improving after
the ongoing operation. But political stability is going to take some
years to come, so we need to be patient.
BRR: What is the local IT usage situation like?
SG: Now about 1800 IT companies are operating in Pakistan.
But they are mostly exporting because local use of IT solutions is
very low. Very few Pakistani companies get their work done by
Pakistani companies. I must tell you not a single Pakistani bank
has bought our NetSol financial software license. They don’t
trust the local industry. Even if I offer them discount – which is
very hard to offer given that we will be foregoing lots of dollars of
exports when we deploy our precious human resources for local
engagement – they are not interested, even though we will give
them immediate support and services. A bank needs software to
run its operations. And they will go to Dubai to get it and not
come to Lahore or Karachi and get reliable service at home.
BRR: How has NetSol journey been so far?
SG: Eighteen years ago, I was a very successful IT consultant in
Australia when I decided to pack my bags and bring my family to
Lahore and start my own business here. I did not see a single
Pakistani IT company selling any software in Australia. I wanted
to create a company that could create global demand and be
recognized globally. From the outset, NetSol got its contracts
overseas, starting from Thailand. We had an ideal break, but we
also worked really hard to ensure that customer service was
superior and we kept getting opportunities. We merged NetSol
with a US company, formed by my brother, in the 1990s.
We survived the dotcom bust, the mid-2000s tough times,
and the 2008 financial crisis. We were able to get the critical
CMMI quality certification, becoming the first Pakistani
company to do that. By 2006, we had reached CMMI level-V,
shared only by 150 other IT companies sin the world back then.
We then focused on our own software product – NetSol
Financial Suite. We have now started developing next-generation
product, called Ascent. Now it has been commercialized in the
market since a year now. We will face a slow year or two before
our new product takes ground. Now we are facing pressures on
delivery – but with 1500 people in Lahore and about 100 people
in Karachi, we will able to meet the growing demand.
We are a global company now. We boast customers around
the world. And now we are hiring people from around the world,
including United Kingdom and Germany. You can say we are
becoming a true multinational now. Our revenues last year were
$40 million, the largest for any IT firm in Pakistan. We expect
NetSol to be a $100 million company by 2017 – barring any
crisis. That’s the first milestone.
BRR: Tax exemption for IT exports (software and
services) is expiring on June 30, 2016. How do you
see that?
SG: I have been advocating for extension of the tax break to the
government for some time now. They should have done
something on it by now – a new law needs to be passed. Lapse of
the tax break will hurt export proceeds. Subsidiaries may not
bring exports back home. The stature of the IT industry will
further go down. But the government is not listening. They are
serious only for telecom sector. The IT minister has so far not
even met any IT industry stakeholders.
BRR: As a provider of IT products and services, how
do you see the IT usage in public sector?
SG: I think the Punjab government is ahead of the pack in IT
usage, mostly due to the Chief Minister. Punjab is doing a lot of
in-house IT development work. They have picked the right team
for the purpose and very young people like Umar Saif are leading
the way – they are bringing the change in Punjab for citizen
services which will be visible in next five years. They don’t take
our help, but we wish them well.
But generally, governments have been lazy in Pakistan when
it comes to usage. Government has not been able to provide the
hype Pakistani IT industry could have created.
Interview by Ali Khizar and Sidra Farrukh
