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Pakistan has transformed from a regulated state-owned monopoly telecom market to a deregulated competitive structure very challenging. Penetration of fixed-line and Internet services remain low. The mobile market has taken off, with high annual growth and it’s looking like a sustained development phase. The Internet market certainly has huge potential, but there is a long way to go. Operators covered for Pakistan include: Mobilink, Ufone, Paktel, Instaphone, Telenor, and Warid Telecom.

Notable highlights of Pakistan Mobile Forecast include:

• Pakistan will continue to see reductions in ARPUs over the forecast period of 2008 - 2010. In 2010, Pakistan will have the average ARPU level of US$ 2.84, which is the lowest ARPU in our coverage list of countries.

• Pakistan will see its wireless penetration level increase from a projected 58.7% in 2008 to a forecasted 71.6% in 2010. This would make Pakistan the most highly penetrated market in South Asia.

• The largest operators in Pakistan are Mobilink, Ufone, Telenor and Warid Telecom; they will have market shares (by subscribers) of 36.1%, 19.3%, 21.2% and 17.3% respectively in 2010.

• In addition, a smaller operator, Paktel, is growing rapidly. Its market share will increase from our projected 3.7% in 2008 to a forecasted 6.4% in 2010.

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Emerging markets mobile operator Millicom reported fourth-quarter revenues of USD 768 million, up 41 percent from a year earlier on strong subscriber growth. EBITDA improved 34 percent to USD 307 million, and net profit rose to USD 113 million from USD 50 million a year earlier, helped by a tax benefit in Colombia. Millicom added 3.4 million new subscribers in the quarter for a total 23.35 million at year-end, of which 96 percent were prepaid. The company said the strong subscriber growth led it to accelerate investments last year, which rose to over USD 1 billion from USD 616 million in 2006. It expects to again spend over USD 1 billion this year. MIllicom will pay a special dividend of USD 2.40 per share with the proceeds from selling Paktel.

Central America remained the company’s largest market with revenues of USD 329 million, up 31 percent from a year earlier. EBITDA improved 28 percent to USD 168 million. The region added 1.42 million customers during the quarter for a total 8.82 million, helped by the introduction of per-second billing last year.

In South America, revenues rose 47 percent from a year earlier to USD 239 million, while EBITDA improved 54 percent to USD 75 million. Subscriber numbers rose to 5.89 million from 5.30 million at the end of September. Millicom said results in Colombia were hurt by the cut in interconnection rates, but a parallel cut in end-user prices is expected to offset the effect. Tigo Colombia added 276,000 subscribers in the quarter.

In Africa, sales rose 57 percent to USD 145 million and EBITDA increased 34 percent to USD 44 million. Over 1 million new customers were added in the quarter, for a total 5.67 million. Milicom said its operations in Chad, which were shut down at the end of January, are preparing to restart services shortly. Growing in the business in Chad and DRC led to a drop in the EBITDA margin to 31 percent last year, which Millicom said should be a low point and wa salready improving from Q4.

In Asia, revenues from continuing operations were up 43 percent to USD 54.5 million, and EBITDA rose 27 percent to USD 20.4 million. The number of subscribers increased to 2.96 million from 2.62 million three months earlier.

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The Pakistan mobile market grew to a total of 70 million mobile subscribers in September, up 3 percent from 68 million in August, according to figures from the Pakistan Telecommunications Authority. Mobilink was the number one, with 28.57 million customers versus 27.83 million in August. Ufone came in second with 15.42 million subscribers from 15.33 million a month earlier, and Paktel grew to a total 1.23 million users from 1.04 million in August. Warid had 11.87 million subscribers at the end of September versus 11.5 million subscribers in August. The mobile density was 43.60 in September as compared to 42.64 in August.

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Pakistan had a total of 58.39 million mobile subscribers at end-April, up from 55.62 million at end-March, according to the Pakistan Telecommunication Authority (PTA). Mobilink had the highest number of subscribers with 25.21 million subscribers, followed by Ufone with 12.49 million subscribers, Warid with 9.71 million subscribers, Telenor with 9.63 million subscribers, Paktel with 1.02 million subscribers and Instsphone with 0.33 million subscribers. The mobile density was 37.58 in April 2007 compared to 35.79 in March.

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Forbes writes…Having failed over the summer to make a big splash in the global portable phone market, China Mobile Communications is dipping its metaphorical toe into the pool instead. The state-owned parent of China’s largest mobile phone operator, is paying about $286 million to buy control of Paktel, a small, unprofitable mobile operator in Pakistan.

China Mobile Communications easily trumped a host of competing bidders by offering a substantial premium for Paktel, which was put on the block by its current owner, Millicom International Cellular (nasdaq: MICC - news - people ) of Luxembourg, in November. Earlier last year, China Mobile tried to buy all of Millicom, which specializes in emerging markets, but the deal fell apart. (See “China Still Learning M&A”)

The acquisition, when completed in February, would be China Mobile’s first and small overseas excursion after years of toying with the idea. The Beijing-based concern currently controls Hong Kong-listed China Mobile (nyse: CHL - news - people ), which provides service in Mainland China.

Pakistan is not a bad place for China Mobile to start an international expansion. The mobile market resembles to China’s in many ways. Like China, it is a fast-growing emerging market, with a penetration rate of more than 25%. The cozy political relations between Pakistan and China would also bode well on the political and regulatory fronts.

The problem with Paktel is that it needs significant investment. It is the fifth-biggest company out of six concerns vying to serve a population of 160 million, and it already has $138 million in debt. The China Mobile offer values the company at $460 million, including the borrowings and some minority interests.

Millicom is selling because it could not afford to invest enough to make Paktel a contender. The company said it does not plan to sell holdings in the other 16 markets it serves, located in Africa, Asia and Latin America.

One executive with knowledge of the bidding process said Paktel would give China Mobile access into a market that is expected to add 50 million new subscribers in the next five years.

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Iht writes…China Mobile Communications, the world’s biggest cellphone company, has agreed to buy Paktel of Pakistan in its first overseas acquisition, gaining a foothold in a cellphone market that almost tripled in 18 months.

In a statement Sunday, Millicom International Cellular, a Luxembourg company, said that China Mobile, based in Beijing, would pay it $284 million to buy 89 percent of Paktel.

The acquisition will allow China Mobile to export the marketing tactics and technology it developed in the rural areas of China, the world’s largest market by users. The number of cellphone subscribers in Pakistan more than doubled in five of the past six fiscal years to 46 million at the end of November, according to the Pakistani telecommunications regulator.

“China Mobile must have seen the tremendous growth and the market’s potential to grow in coming years,” said Mohammed Sohail, director at Jahangir Siddiqui Capital Markets in Karachi. “It is the value of license that is significant because the government is not issuing new licenses and any company will have to buy the existing licenses to start services.”

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English.Eastday writes…China Mobile announced yesterday it has signed an agreement with Millicom International Cellular to buy the Luxembourg-based company’s 88.86 percent share of Paktel Limited, Pakistan’s fifth largest mobile phone operator.

The deal, which values the Pakistani company at 460 million U.S. dollars, requires government approval but is expected to be completed in late February.

This is the first time that China Mobile has acquired a foreign telecommunication company of “strategic significance”.

Last year, the Chinese telecommunication giant acquired all shares of Hong Kong’s fourth largest mobile operator, China Resources Peoples Telephone Co. Ltd. and a 19.9-percent stake in Phoenix TV.

Paktel Limited had 1.56 million mobile phone subscribers, for a3.5 percent share market in Pakistan as of last October.

The Pakistani telecommunication market is one of the fastest growing markets in the world, with 12.8 percent of the population using mobile phones.

Millicom is a global telecommunication investor, providing cellular telephone services to 12.8 million people in 17 emerging markets in Asia, Latin America and Africa.

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PeopleDaily writes…China Mobile Communication Corp (CMCC) yesterday said it had agreed to take over Pakistan’s mobile phone firm Paktel Ltd for $284 million, marking its first major overseas acquisition.

Under the deal, CMCC parent of Hong Kong-listed China Mobile Ltd agreed to acquire from Luxembourg-based Millicom International Cellular SA an 88.86 percent stake in Pakistan’s fifth-largest mobile operator.

The acquisition followed CMCC’s abortive bid last year for Millicom, which runs mobile networks in 16 countries in Latin America, Africa and Asia. The deal was estimated at $5.3 billion and would have been the largest overseas acquisition by a Chinese company.

Marc Beuls, president and chief executive officer of Millicom, said in a statement that Millicom chose to sell Paktel to CMCC after a number of parties showed “strong interest”; and the deal would enable Millicom to “focus on the 16 markets where we have already established strong market positions”.

The deal, which is expected to be completed next month after regulatory approvals, marks a big step forward for CMCC, which has been increasingly aggressive in tapping into overseas emerging markets.

CMCC is regarded as the most capable Chinese operator to expand overseas through acquisitions.

Its Hong Kong-listed arm had 71.4 billion yuan ($9.1 billion) in cash and cash equivalent by June 30, 2006.

Lu Qijun, a researcher with the State-owned Asset Supervision and Administration Commission, said it’s natural for CMCC to expand abroad to generate new revenue streams.

“The government has been encouraging telecom operators to expand overseas to grow stronger and bigger,” said Lu, adding CMCC is well-positioned to tap into overseas markets thanks to its fat profits.

CMCC last year generated 285.3 billion yuan in revenues and 96.8 billion yuan ($12.4 billion) in pre-tax profits. The firm had 318 million mobile phone subscribers by the end of last year, up 20 percent year-on-year.

According to statistics released by the Ministry of Information Industry (MII) yesterday, China had a total of 461 million mobile phone users by the end of 2006.

With mobile phone penetration running high in big cities, CMCC has identified emerging markets including China’s rural areas and developing countries as a major battlefield for new subscribers.

Pakistan has a population of more than 160 million but mobile phone penetration stood at only 12.8 percent in 2005, which promises much potential for subscriber growth.

Paktel had 1.56 million mobile phone subscribers by October 2006, an increase of 69 percent compared to December 2005.

Chinese operators’ overseas expansion could benefit domestic telecoms equipment manufacturers such as Huawei Technologies and ZTE Corp.

CMCC is expected to upgrade Millicom’s networks if it acquires the firm. Huawei is an equipment supplier to Millicom.

“We believe China Mobile’s successful acquisition of Paktel would have a positive effect on our business in Pakistan,” said a Huawei spokesman.

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TelecomAsia writes…China Mobile has agreed to buy 88.86% of shares in Paktel, Pakistan’s fifth largest mobile carrier, the company’s listed unit said.

The deal values Paktel at $460 million, China Mobile said in an announcement.

It said the deal was subject to regulatory approval but was expected to be completed by late February.

Global telecom investor Millicom International Cellular earlier announced it was considering selling Paktel due to difficult business conditions in Pakistan and frequency interference problems.

The Luxembourg-based company decided to sell Paktel after talks over gaining increased bandwidth from the Pakistan Telecommunications Authority failed to resolve interference problems. Millicom said that as a result, it would sell or close the company.

Millicom has operated in Pakistan since 1990. As of September 30, Paktel had 1.53 million total subscribers, up 62% from 944,718 the year prior, placing it fifth in terms of active subscribers.

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WirelessWeek writes…China Mobile Communications made its first push to offer services outside of China by purchasing a nearly 90% stake in Pakistan’s Paktel from Millicom International Cellular. The deal has a cash value of $284 million, according to Millicom.

Under terms of the agreement, China Mobile will acquire an 88.9% stake in Paktel, which gives the operator inroads into the competitive wireless market in Pakistan.

The majority stake purchase represents the first buy China Mobile has made outside of China and Hong Kong.

Millicom decided to unload the Paktel stake so it can concentrate its efforts on the 16 other markets it serves.

China Mobile also reported that its subscriber base topped 300 million at the close of 2006. In total, the company calculates its customer totals in China were 301.2 million at the end of last year.

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