Warid plans $5 billion investment in Pakistan

[Neo]

Warid plans $5 billion investment in Pakistan ​

ISLAMABAD (June 15 2008): Warid Telecom Pakistan plans $5 billion investment to improve its services in the country. The tele-density in Pakistan is said to be more than 50 percent but it is actually around 40 percent, Warid Telecom International Group Chief Technical Officer Marwan Zawaydeh said in an interview.

According to Private TV channel he said tele-density is calculated on the basis of sales data that can be misleading as active connections are much less than the sales' figure. He said there is room for further growth in the telecom industry and it could further contribute to the GDP of the country.

"Though Warid and Telenor entered the market almost together, it is true that our competitor has acquired more market share because Telenor captured the market in under-served rural areas whereas we focused more on urban centres. We were left behind in market share but not in quality of service."

He said Warid has recently re-launched itself and has come up with value-added services. Its focus is on untapped areas. This month, Warid will launch Blackberry and in the near future many more services are likely to come. The company plans to invest $1 billion in the next three years.

At present, he said, the company has no plan to get listed on the Karachi Stock Exchange. The business environment in Pakistan is very good as there is a lot of room for the telecom business to grow since customers are interested in new technologies, new services, etc. The main drivers of business in Pakistan are the youth.

Business Recorder [Pakistan's First Financial Daily]

 

[maqsad]

According to wikipedia:

Warid Telecom International is an Abu Dhabi based mobile telecommunication firm providing telephony services in Bangladesh, Congo, Pakistan and Uganda. Warid is expected to launch in the Ivory Coast and Georgia soon.

Telecommunications is one of the least risky and highest paying investments around. It also has the weakest barriers to entry technology wise since everything is very easy to buy and deploy. So if Warid expects a 20% annual return in profits for their $5 billion investment that means every single years $1 billion in foreign exchange is going to leave pakistan.

 

[AgNoStiC MuSliM]

According to wikipedia:




Telecommunications is one of the least risky and highest paying investments around. It also has the weakest barriers to entry technology wise since everything is very easy to buy and deploy. So if Warid expects a 20% annual return in profits for their $5 billion investment that means every single years $1 billion in foreign exchange is going to leave pakistan.

I believe the GoP applied a ten percent (or 15) tax on such income transferred overseas in the new budget, so we'll get some cut out of this.

 

[maqsad]

I believe the GoP applied a ten percent (or 15) tax on such income transferred overseas in the new budget, so we'll get some cut out of this.

I think the Pakistani public is getting ripped off yet again. Why should pakistan be happy with 15% of something which should be 100% pakistani?

Like I said before the ROI in telecommunications is extremely high and asides from pure capital the barriers to entry are very very small. Technology is so easy to implement or get implemented that it is not even an issue. Markups are astronomical. Here is a 10 year scenario, assuming they are indeed expecting 20% return on capital then over a 10 year period their infrastructure on this latest investment alone will be $10 billion. These are just pure profits, the infrastructure itself is going to have a fixed value which depreciates a bit but will still be worth hard cash for decades to come. So $5 billion will net $10 billion in profits over 10 years and the equipment will probably be worth about $2 billion after a decade of depreciation. Out of this profit GoP gets 15% X $10 billion which is $1.5 billion. That's it??? The government takes $1.5 billion while $8.5 billion in foreign exchange leaves the country forever??? This is fundamentally wrong. GoP should obtain soft loans and invite tenders from local consortiums.

Now, if GoP can arrange soft loans and create an enterprise which is part state owned then the figures look better. Loans can be obtained for less than 10% per annum from local banks or international lenders. As long as a consortium has official Gop permission to set up a telco network then any lender will be happy to loan money because everything is virtually foolproof. The total interest on a $5 billion loan will be less than $1 billion total over a 5 year period! And after 5 years it will be paid off and 100% of the profit and 100% of the forex will stay in Pakistan instead of yet another "foreign investment" bleeding the economy dry.

The alternative is to have someone else owning this lucrative business and making $1 billion a year and yanking it out of the country.