MARKET STRUCTURE, DIGITAL INNOVATION, AND EFFICIENCY PERFORMANCE IN PAKISTAN’S MOBILE TELECOMMUNICATIONS SECTOR IN PAKISTAN

Abstract

Thetelecommunicationssectorplaysacriticalroleinsupportingdigitaltransformation,financialinclusion,andeconomicdevelopmentinPakistan.ThisstudyinvestigatesthedeterminantsoftechnicalefficiencyamongPakistan’smajorcellularmobileoperatorsduringtheperiod2010–2025.Theanalysisfocusesonfourleadingoperatorsandemploysatwo-stageempiricalframework.Inthefirststage,DataEnvelopmentAnalysisisutilizedtoestimatetechnicalefficiencyscores.Inthesecondstage,aTobitregressionmodelisappliedtoexaminetheinfluenceofmarketshare,capitalexpenditureintensity,digitalserviceadoption,taxationburden,andinflationonefficiencyperformance.Thefindingsrevealthatthetelecommunicationssectormaintainedrelativelyhighlevelsoftechnicalefficiencythroughoutthestudyperioddespitefacingsignificanteconomicandoperationalchallenges.Theresultsindicatethatmarketsharecontributespositivelytoefficiency,highlightingtheimportanceofeconomiesofscaleinacapital-intensiveindustry.Capitalexpenditureintensityisalsofoundtoenhanceefficiency,explainingthatcontinuedinvestmentinnetworkinfrastructureandtechnologicalupgradesstrengthensoperationalperformance.Furthermore,digitalserviceadoptionpositivelyaffectsefficiencybyenablingoperatorstodiversifyrevenuesourcesandimproveresourceutilization.Incontrast,taxationburdenandinflationexertnegativeeffectsonefficiency,reflectingtheadverseimpactoffiscalpressuresandmacroeconomicinstabilityonsectoralperformance.ThestudyprovidesimportantinsightsintotherelationshipbetweenstrategicbusinessdecisionsandoperationaloutcomesinPakistan’stelecommunicationsindustry.Thefindingsemphasizetheneedforinvestment-friendlypolicies,supportfordigitalinnovation,andastableeconomicenvironmenttoenhanceefficiencyandensurethelong-termsustainabilityandcompetitivenessofthesector.