The fixed-line telecom giant’s retail business seems under the weather. The Pakistan Telecommunication Company Limited – or PTCL, which is part of the PTCL Group (PSX: PTC) – provides three major last-mile connectivity services: fixed local loop (FLL, or landline) telephony, wireless local loop (WLL) telephony, and broadband. PTCL has different degrees of competition in these segments. PTCL supplies wholesale connectivity services to many of its competitors.
As per the latest official data from the telecom watchdog (PTA); in the wireless broadband segment, EvDO broadband subscriptions (in which PTCL’s Evo has overwhelming presence)) fell from 1.33 million in June 2015 to 1.08 million in June 2016. These subscriptions had hit a peak of 1.86 million in 2014. It is quite plausible that PTCL Evo’s falling subscriptions have to do with growth in mobile broadband. Official data show that between July 2014 and July 2016, cellular firms amassed nearly 31 million 3G users.
Observers would recall that since its launch in 2009, Evo had gradually found traction among folks who were dependent on out-of-home Internet usage but didn’t have access to high-speed mobile data services on their Smartphones. It seems that Evo satisfied that market quite well until 2014, when the 3G and 4G services were launched. Evo subscriptions have fallen down after that.
But it’s not just wireless broadband that has been affected. The DSL Internet (fixed broadband) business, where PTC again is the overwhelming market leader, has also suffered stagnation. As of June 2016, DSL subscriptions had declined by 4 percent year-on-year to 1.42 million. During this time, subscriptions have also fallen for the next dominant technology, WiMax. Niche segments such as fiber-to-the-home (FTTH) and hybrid fiber-coaxial (HFC) broadband have, however, seen subscriptions added to their tallies.
If the fixed-mobile substitution (FMS) has indeed caught PTCL’s retail broadband expansion in its tracks, then this would be the second time that PTCL’s retail business would be done in by FMS. It was mobile telephony in the past decade that led to many folks dumping landlines in favour of mobile phones. Between 2005 and 2015, fixed-line subscriptions have come down by 40 percent to three million.
To counter FMS at that time, PTCL had introduced Vfone in the WLL segment circa 2005, besides focusing on data services. Vfone showed massive growth in its formative years, but later peaked at 1.42 million subscriptions in 2012. Now, the bottom seems to have fallen off: Vfone lost about 0.9 million subscriptions to tumble down to 0.25 million in June 2015. Signifying a trend, WLL subscriptions fell for nearly all operators.
PTCL’s retail business, especially its massive broadband network, has been billed as one of the firm’s key growth drivers.
But now the decline in its broadband subscriptions in the age of competitive mobile broadband is a pickle. As an integrated telecom carrier, PTCL would naturally like to hold on to its retail footprint. But it seems that while the remaining landlines will survive, the last-mile broadband market will grow more competitive. PTCL, as the carriers’ carrier, may need to ponder over its future in that market.
