The recent Mobile penetration in market is growing at an alarming rate. Especially with the start of 3G and 4G spectrum. VimpleCom, the parent company of Mobilink has recently undergone a merger with Warid which has given boost to it 3G services along with the inclusion of 4G LTE. Mobilink is leader in the 2G cellular segment with 29% share amidst 119 million subscriptions, while it is second in dealing with 3G data market by having 26% among 16 million subscriptions.

The Rising Smartphone Penetration in the country will help Mobilink to grow rapidly with recent merger with Warid.

According to Moody is operating in a very competitive market. The two main companies Zong and Telenor are cash-rich sponsors and can give hard time if the merger was not anticipated. With Lower average revenue per user at $1.7 per month and low wireless penetration 60% of the population gives a bigger opportunity for growth in this sector.

There are many reason why a growth is possible this time, the country is experiencing boom in terms of communication sector but the taxation might have adverse effects. This will as a result cause tariffs to go high. This is a huge challenge for the industry but on aggregate it is still an attractive sector to invest.

“Higher fees and taxes are credit negative for Pakistan’s telecommunications industry because they will discourage smartphone adoption and mobile data usage growth – key drivers for industry revenue growth. Telecom operators spent $1.1 billion on the 3G and 4G spectrum auctions in 2014 and need to generate sufficient returns on their investments.”

The note underscored.

“Besides the 19.5% FED on mobile usage and 14% withholding tax additional taxes, will deter demand growth and subsequently weigh on telecoms’ profit growth.”

Mobilink, however, being the market leader has an Ample opportunity to expand it 3G services and bring LTE spectrum of Warid to new Horizons. How will they do it, is now a question that should be answered by VimpleCom.