1. ROLE OF PTA IN THE DEVELOPMENT OF TELECOM SECTOR VISION Fair Regulatory Regime to Promote Investment, Encourage Competition, Protect Consumer Interest and Ensure High Quality ICT Services

2. SEQUENCE  PTA ORGANIZATION AND FUNCTIONS  INDUSTRY SCENARIO  INCETIVES TO THE INDUSTRY  SECTOR LIBERALIZATION  INDUSTRY PERFORMANCE  TARIFF  CHALLENGES

3. Perspective  PTA was established under the Telecom (Re- Organization) Act 1996 To regulate telecom system and services in Pakistan  Headquarters in Islamabad. Regional Offices are in Karachi, Quetta, Lahore, Rawalpindi and Peshawar  Autonomous Body

4. Organization MEMBER (TECHNICAL) MEMBER (FINANCE) CHAIRMAN FINANCE LAW LICENSING WIRE LINE LICENSING WIRELESS ENFORCEMENT INDUSTRY DEVELOPMENT COMMERCIAL AFFAIRS FAB COORDINATION

5. Regulate telecom systems and services through fair, transparent and judicious regulatory framework Issuance of licenses for various telecom services Enforcement Protect the interests of users and service providers Investigate and adjudicate on complaints and other claims Process applications for radio frequency spectrum Promote modernization of telecommunication systems and services Make recommendations to the Federal Government on policy matters Functions

6. Telecom Scenario 2002 PTCL Monopoly on Fixed Line Telephony Cellular Mobile Sector –Stagnant Competition in Value Added Services (Small Operators)  Pay phones  ISPs  Cable TV Low Tele Density  Fixed 2.5  Mobile 1.0 Total 3.5

7. Incentives to the Industry 2001 (Reduction in Fee / Royalty)  Mobile phone - From 4% to 1.5%  ISPs- From 4% to 0.66%  Royalty onEquipment Sale- From 5% to 0%  License Fee  ISPs in Balochistan- 50%  Satellite Service- Fee & License Abolished (Registration Only)  Type Approval Fee  Locally Manufactured Equipment- 50%  Foreign Manufactured Equipment- 33% Continue

8. Incentives to the Industry 2001 (Reduction in Fee / Royalty)  PTCL Leased Line Charges - 30% Reduction in 2002 For Mobile Operators - 17% Reduction in 2005  PTCL Leased Line Charges- up to 39% Reduction in 2005 For LL & LDI Operators  Activation Charges - Rs. 2000 to Rs. 500 For Mobile Phones  Advance Tax on Prepaid - Rs. 125 to 45* Cards *on card value of Rs. 500

9. SECTOR LIBERALIZATION

10.  Open Auction for Award of Licenses -14 April 2004 ( US $ 10 MILLION Earnest money)  Companies Participated in the Auction - 9  Highest Bid - US$ 291 Million (Existing Licensees to pay the same fee) WARID & TELENOR Cellular Mobile New Licensing

11. WARID & TELENOR Serviceability OPERATIONS WARID TELENOR  Service Started May 2005 March 2005  Cities/ Towns Covered28 (70 Jan 06) 3 (Now 160)  No of BTs 536 (Now 617) 350 ( Now 1000)

12. Deregulation Policy Open and Technology Neutral License Term – 20 Years (Review after 5 Years) License Categories Local Loop (LL) Long Distance & International (LDI)

13.  Licenses Issued  License Fee LL - US$ 10000 LDI - US$ 500000 (Performance Bond- US $10 MILLION) Issuance of LL & LDI Licenses LL – 79 LDI - 13

14.  Spectrum auctioned through open bidding – Aug 2004  Spectrum allocated on regional basis  Licenses Issued – 92  Fee Collected – RS 14 Billion Spectrum Auction for WLL

15. NEW LICENSES LL (Fixed) 79LDI13WLL92CMT2

16. Salient Regulatory Initiatives  Determination on Interconnect  Determination on Co-Location  Determination on Limited Mobility  SMP Status of PTCL and Mobilink  Simplified VAS Licensing Regime  Many licenses condensed into only two  Some licenses replaced by registration  Enabling environment for broadband penetration

17. INDUSTRY PERFORMANCE

18. Teledensity Growth (fixed telephony) 1.85%1.91% 1.99% 2.10% 2.18% 2.27% 2.50% 2.70% 3.17% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 199619971998199920002001200220032004 Fixed Line Connections - 5,318,480 WLL Connections - 4,17,349 3.70% 2005

19. Major WLL Companies PTCL 238,202 TELECARD 132,500 WORLD CALL 43,114 GREAT BEAR 3,511 DV COM starting the service soon BURAQ starting the service soon

20. Cellular Mobile Growth Penetration 12.7% Jun-00Jun-02Jun-04Nov\ Dec 2005

21. Cellular Mobile Sites Growth

22. Market Share of CMT Operators

23. Pay Phone Growth

24. Internet Subscriber

25. REVENUE / INVESTMENT

26. License /Spectrum Fee 16,765 397 0 2 4 6 8 10 12 14 16 18 20 CMT WLLLL & LDI 20042005 2,593 9,267 2004 - RS 16,765 BILLION 2005 - RS 12,257 BILLION

27. Cellular Mobile Revenue

28. GST/CED of Telecom Sector

29. FDI in Telecom Sector (% of Total Contribution in Total FDI)

30. Investment Made by Major Companies COMPANY EXPECTED INVESTMENT (US $ Million) Telenor (CMT) 400 Warid (CMT) Warid (CMT) 392 392 PTCL 273.3 World Call World Call 115 115 TeleCard 165 DV Com DV Com 38 38 DanCom 12 Burraq Telecom Burraq Telecom 21.5 21.5 Redtone 38.2 Existing Mobile Operators Existing Mobile Operators 645.5 645.5 Total 2,100.5

31. TARIFF

32. Tariff Reduction of PTCL Charges (Rs.) Incl. of 15% GST 1996200320042005 Connection Charges 2500 Urban - 1553 Rural - 575 Urban - 863 Rural - 575 No change Line Rent50300200 No change NWD Charges42 / min10 / min6.04 / min4.6 / min International Calls * (Prepaid Card) 74 / min39 / min23 / min 10.35 / min*

33. Charges inclusive of 15% GST Company Domestic Long Distance (Rs.) International (Rs.)* PTCL 1.73 – 3.4510.35 World Call 3.453.44 DV Com 2.885.74 Callmate 3.86 – 4.546.36 Dancom 1.753.00 Burraq 1.71 – 3.094.59 Circlenet 2.04 – 3.053.98 * International tariffs vary from country to country and for calls to Mobile networks in different countries Long Distance Call Rates Prepaid Calling Cards

34. Local Call Rates - WLL Company Line Rent Rs. Same Network Other Networks PTCL 1742.01/ 5 min Tele Card 1490.40 / min2.01/ 5 min World Call 175 Free 0.85 / min No Installation Charges

35. Tariff Reduction Cellular Mobile Charges (Rs) 2000200220042005 Prepaid Air Time (On-net) 6.25 / min 5.75 / min 4.75 / min - Mobilink 5.00 / min - Ufone 3.75 / min - Paktel 1.5– 3.00/ min Postpaid Air Time (On-net) 1.991.50 1.00 0.75 Fixed line to Local Mobile 3.20 / min 2.80 / min Rs. 2.12 / min Rs. 1.77 / min (July 06) Roaming Charges 5.0/min6.0/minFree since OctoberFree

36. Achievements  Unprecedented Growth in Telecom Sector  Tariff Significantly Reduced  Substantial Investment Made  Economic Growth  Employment Opportunities  Healthy Competition  Successful Holding APT Meeting  Significant Role in Earthquake Relief Efforts  Heavy license fee collected for the Government

37. CHALLENGES

38.  MNP Allows Users to Retain the Same Number While Switching Over to Another Operator  Enhances Fair Competition  60% task completed  MNP regime will be implemented in first half of 2006 Mobile Number Portability

39.  Many Options to Extend Telecom Facilities (Use of WLL, VSAT, IP Technologies and Cellular Mobile)  Plan to establish Tele-Centers through Micro Financing  Implementation in consultations with local Governments Rural Communication

40.  High Speed (128 kbps & More) “Always On” Internet Connection  Broadband Access a Catalyst for Economic & Social Development  Broadband Penetration very low - 30,000 Approx  Efforts in Hand to Enhance Penetration  International connectivity will be enhanced soon  Cost of Domestic Private Lease Circuits (DPLC) being reviewed  Creation of enabling environments Broadband

41. THANKS