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Sunday, June 27, 2010

Market liberalization...myth or reality?...Comment.

The day Pakistan Government decided to de-regulate telecom industry in Pakistan; it was already looking for potential buyer to take over state-owned Pakistan Telecommunication Company Limited (PTCL). The idea to de-regulate telecom sector was aimed at doing away with telecom monopoly of PTCL. However, when the Telecom De-regulation Policy, 2003 was announced, the deregulation pundits were shocked to see that the entire policy revolved around PTCL. No private sector licensee could breathe in the liberalized environment without PTCL taking away its pound of flesh.
The PTCL was privatized. As a matter of fact, it was sold to those who were a strong monopoly in their own country and had no experience of competition whatsoever. Prior to that, nearly one dozen licenses were issued to companies desiring to set up long-distance international (LDI) systems in Pakistan. All these licenses and their business cases were not viable from day one because all of them were made dependent on PTCL for practically everything.
The PTCL in the new environment was Etisalat who was not used to private sector competitors. Using its muscles, borrowed at the time as it had not made promised payment to the government and was using its might to its advantage, it elbowed out nearly all the private sector operators. It had the advantage of support from conniving senior executives in the government. The last nail in the coffin of deceased telecom sector was take-over of private-sector Burraq Telecom by state-owned Qatar Telecom. Pakistan Telecom market has become monopoly of state utilities of Gulf States. So much for market liberalization of Mr. Shaukat Aziz.

1 comment:

  1. There is another myth that PTCL is owned by the government and that any policy to promote its interests at the cost of private sector operators is justified.