PEST ANALYSIS

Introduction
A PEST analysis for the telecommunications industry needs to be divided into the four categories: 1. 2. 3. 4. Political, Economic, Social and Technological.

Each of these subcategories of a PEST analysis help build up an idea of the framework that helps macro-environmental factors used in the environmental scanning component of strategic management. A PEST analysis is part of the external analysis that is carried out when doing market research, and gives an idea of the macroenvironmental factors that a company needs to keep in consideration.

PEST Analysis of Pakistan Telecommunication Sector:

Introduction Pakistan is on the verge of Telecom revolution Pakistan continues to be one of the fastest growing telecom markets in the world. Reforms introduced by successive Pakistani governments over the last decade have dramatically changed the nature of telecommunications in the country. The Pakistani telecom sector has attracted more than $9 billion in foreign investments. During 2007-08, the Pakistani Communication sector alone received $ 1.62 billion in Foreign Direct Investment (FDI) about 30% of the countrys total foreign direct investment.

By March 2009, Pakistan had 91 million mobile In addition to 3.1 million fixed lines, while as many as 2.4 million are using Wireless Local Loop connections Pakistan is ranked 4th in terms of broadband Internet growth in the world, as the subscriber base of broadband Internet has been increasing rapidly with the total base crossing 170,000 in the country. The rankings are released by Point Topic Global broadband analysis, a global research centre. Pakistan according to PC World was amongst those top five countries with the highest SMS traffic processed with 763 million SMS during 2008-09. In terms of year-on-year growth, Pakistan traffic volume grew by 253 percent compared to last year during the same period.. The contribution of telecom sector to the national exchequer increased to Rs 110 billion in the year 2007-08 on account of general sales tax, activation charges and other steps as compared to Rs 100 billion in the year 2006-07. According to Government Board of Investment, Cellular Phone Subscribers in 2008-09 are 91,400,000. The Telecom sector all around the world and especially in Pakistan has experienced a tremendous growth in the last few years. The telecommunication sector of Pakistan was awarded the status of industry in 2005 and since then it has been one of the fastest growing sectors of Pakistan. The mobile density reaching 52.87 in April, 2008 and the number of mobile subscribers reaching 85 million. (Source: Pakistan Telecommunication Authority, Annual report 2007-2008).

Political Analysis
The political factors of the telecom industry are the ways that the government intervenes on the industry. Government laws put restrictions on the tariffs and phones that the telecommunications industry produces and all new technology must adhere to a strict set of government rules. Goods and services provided by the telecom industry also need to fit the safety and privacy government regulations. In Pakistan Telecom sector is playing a very important role in whole country and vastly spreading day after day. So it is also affects by government rules and regulation like other sectors. The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. Some political factors are: Un Stable political environment in Pakistan. Government policy influence laws that regulate or tax on telecom.

Anti-trust regulations Price regulations Rapid change in regulations Changing Government's policies on telecom sector.

Essential Requirement Case 1. A license issued by telecommunications regulation authority is required to commence business in that area; the number of players is thus restricted. 2. Need to adhere to numerous health & safety regulations in order to comply with expected standards. 3. Mobile telecom service providers do not have 100% freedom in pricing issues. 4. Due to the sensitive nature of the operations within the industry, governments would generally not allow 100% share holding by foreign investors in the local mobile telecommunications industry. Government is also supporting telecom industry by providing environment that is investor friendly for telecommunication sector. Government is also supporting telecom industry.

Economic Analysis
Economic growth, inflation and interest rates can all have an impact on the telecommunications industry. Rival telecom businesses need to stay competitive but most have had to raise prices during the global recession. Different companies will try to beat others by offering limited time offers on some of the latest mobile phone handsets. Telecom sector has been played an important role in our economy during the previous 5 to 6 years and help to increase efficiency in telecom sector. In fiscal year 2008-09 saturation in the market and global financial crisis the total investment decrease 47% in telecom sector of Pakistan which is a huge deficit in telecom sector of Pakistan. Despite the global crisis the telecom sector continuous to grow positively in term of subscription and revenue. Operators speedily rolled out their infrastructure reaching out to meet of the population. But still huge are remain where investment opportunities exist. Marketers should consider long term and short term state of a trading market. Inflation is controlling by state bank and under strict eyes but unemployment rate is going up and up with the increase of level of poverty. Economic instability is worsening day by day as liquidity crunch is prevailing in the world.

Investment in telecom sector In 2008-09 operators total US $1.6 billion worth of investment has been made by all operators in Pakistan. Pakistan provide profitable environment for investment for foreign investors to invest in telecom sector of Pakistan. Due to profitable environment, telecom sector attract US $815 million in 2008-09 which was a big investment during this financial crisis period.

Revenue and growth rate from telecom sector In last 6 months of 2009, telecom sector received over US $143 million. This was 18% of total Foreign Direct investment in Pakistan. Telecom revenue showed 19.8% growth during 2008-09 but in 2007-08 it showed 18.2%. Cellular mobile sector continued to be the leader in telecom revenue, whose share came out to be 64% in total revenue of telecom sector of Pakistan Cellular mobile growth rate is 17% in 2008-09. Government of Pakistan reduce GST/FED rate from 21% to 19.5%. Telecom sector contribute to National exchequer112 billion in 2008-09 but in 2007-08 it was 111 billion.

Social Analysis
Some of the biggest social factors that have affected the telecom industry are those considered with career attitude and safety. The career expectation is increasing as the increase in on-the-go business careers has led to an increase in desire for mobile phones that will alert for messages, phone calls and emails. They also need to have the facility to carry out conference calls, instant messaging and a host of other career focused features. Growth rate of psopulation of Pakistan is increasing at an alarming rate increasing the usage of cell phones. Safety regarding mobile phones also needs to be taken into consideration by the industry. Phones with hands-free features for cars are a must in the current environment. As Pakistan is an Islamic country and people are very strict in case of Islam anything against the philosophy of Islam on either print or electronic media are treated as against Pakistan. Most of the people dislike anything extra-ordinary or something which sabotage their culture or subculture. Companies who are targeting upper-end of market mostly published and aired their advertisement in English language.

In metropolitan cities women are doing work along with their other responsibilities but other than metropolitan cities it is difficult for women to convince their parents and spouses for work.

Technological Analysis
The rate of technological change is important within the telecommunication industry. Revolutionary technological changes and discoveries are having a dramatic impact on telecom industries. New Products New models of phones and communication devices are being produced at an alarmingly fast rate. The companies involves in the communications industry in respect to Pakistan are in a constant race to be the first to have the newest phones with the latest technology. Investment Companies have technology with which they can compete in Pakistan and now companies are investing in their infrastructure to not only expand but also to upgrade their existing structure.

Focus on Technological Efforts Mobile telecommunication technology has made several different products like, Walkman, Paging, Use of postal mail, Alarm clocks, Mobile / SMS banking. Advanced features and services such as cameras, MP3 players, multimedia messaging, email and mobile have been added. The industry by using technology creates several risk related situations especially with regards to network security & system operations.

Productivity Improvements Through Automation Currently all companies except Zong & instaphone are providing Multi-media Messaging Services (MMS), General Packet Radio Service (GPRS), Virtual Private Network (VPN), Pocket Stocks, and Conference Calling, Wallpapers Animated pictures Polyphonic ring tones (WAP), and Voice Mail at low price and some are also providing feature that one can see TV channels on their cell. Now days, due to the sophisticated nature of technologies that exist within the telecommunication industry, it has allowed & facilitated new ways of working for individuals as well as creating new business opportunities.

Mobilink shifted its whole network from 900 MHz to 1800 MHz offer value added services like General Packet Radio Service (GPRS), Multimedia Messaging services (MMS) and Virtual Private Network (VPN) etc.