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After a brief period of sluggish growth, Asia has recently, shown strong consolidation in the telecommunication sector.  The developed economies of Asia have moved ahead into advanced networks and value added services (VAS), reaching maturity in those markets.  It is again China and the SAARC countries that are the real potential for growth in Asia, if not in the world. 

Many domestic subscriber bases have doubled in recent years with tariff prices in the region, amongst the lowest in the world.  The business plan for most of the telcos in the region is to build a profitable business model even when voice tariffs fall to one of the lowest in the world-a one cent-a-minute level, when the US and Europe tariffs are considered low at 20-25 cent-a-minute level; with the purchasing power parity also amongst the lowest globally.  This has placed enormous stress on margins in the industry, but many Original Equipment Manufacturers (OEMs) are now setting up manufacturing facilities locally to offset this pressure.

Today, global players in the telecom industry are developing interest, and are increasingly investing in SAARC markets. Manufacturers are discovering the region as a lucrative manufacturing center; Nokia and Ericsson have successfully done this and now. Motorola too has announced a $100 mn plant in Chennai. Global service providers are buying stakes in local players. Having said this, it is the largely unapproachable rural sector in these areas, where there are opportunities for growth. Innovative delivery options, a favorable regulatory regime, and aggressive pricing stances will ensure that these opportunities are cashed in on.  

India
India is clearly the leader in terms of penetration and its growth in the SAARC region. India's mobile subscribers double the number of fixed line subscribers. The telecom story continues to be the best advert of the country's reforms process.  In about nine years the teledensity has increased from 1.94%  in 1997 (achieved post 50 years of independence) to 13.25% on March 31, 2006.  

In the last six years, the number of mobile subscribers has gone up from just about 1 mn to 100 mn, a subscriber base that only four other countries-China,  US, Japan, and Russia can boast of.  The explosive growth in numbers is directly juxtaposed to the steep decline in the cost of mobile phones and effective tariffs, bringing the phone within reach of people even below the middle-class. 

The setting up of the Universal Services Obligation Fund (USOF) to grant subsidy to telecom operators is a huge step, which will increase the teledensity in the rural areas. This step will be responsible for reaching the magic teledensity 25% by 2010.

Government has set aside nearly Rs 12 bn (from USO Fund) to grant subsidy to telecom operators, and infrastructure providers who are willing to set up telecom network in rural areas.

For India's rapidly growing telecom sector, 2005 was a year of high tempo. Mobile connections grew faster than ever before and value added services made their presence felt and accounted for a notable share of revenues.  On the regulatory front, FDI limit was hiked from 49% to 74%, long distance entry barriers were lowered, new uniform tariff structure for the entire country called 'IndiaOne' was announced, and subsidies were announced by the government for operators to promote rural telephony.

Pakistan
Pakistan's telecom market is in the process of evolving to come to grips with the transition from a regulated, state owned monopoly to a deregulated, competitive structure.  Penetration of telecom services remains low.  The government has ambitious plans to increase the fixed line teledensity of 2.5% in 2003 to 7% in 2010 (they have achieved 3.8% in 2005).  This includes installing a million lines annually. Currently, competition is driving growth in the telecom market and a major impact has already been felt.

Currently, Pakistan is witnessing massive growth in its telecom industry.  In the four-year period up to 2009, nearly $4 bn of investment is expected in the sector.  Pakistan's telecom sector today, employs 20,000 people and this is set to grow rapidly in the near future.  The country's investment friendly policies such as the fixed line Deregulation Policy (July 2003), Mobile Policy (2004), and the Broadband Policy (Dec 2004) have created an atmosphere favorable for investment.

Pakistan's telecom sector employs 20,000 people and this is set to grow rapidly in the near future. The country's policies such as the fixed line Deregulation Policy (July 2003), have created an atmosphere favorable for investment

Growth in the market was reflected in the fact that $1.3 bn revenue was raised in the auction of frequency spectrum in the mobile, wireless, and local loop sectors, while fixed line subscribers base grew from 4 mn in 2003 to 5.9 mn in 2005.  Mobile services saw a boom with the base swelling from 2.4 mn in 2003 to 21 mn in 2005. And the overall teledensity grew from 4.63% in 2003 to almost 18% in 2005.

There is an opportunity for massive growth in the country, as 70% population living the rural areas are largely un-approached by modern telecom.

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