By December2021, a branch of Lucky Cement will be producing mobile phones in Pakistan for Samsung, the world’s largest smartphone manufacturer.
According to a notification filed with the Pakistan Stock Exchange (PSX) on Friday, Lucky Motor Corporation Limited (LMC)–a subsidiary of Lucky Cement Limited that manufactures, assembles, markets, distributes, and sells Kia and Peugeot branded vehicles, parts, and accessories –has recently entered into an agreement with Samsung Gulf Electron.
Hammad Azhar, Pakistan’s Minister of Energy, announced the news on Twitter, writing, “I congratulate Lucky Group and Samsung on entering into a JV to manufacture smartphones in Pakistan.”These positive developments are proof of the DIRBS system’s success in eliminating phone smuggling.Then there was the Mobile Manufacturing Policy last year.”
As part of this transaction, LMC has also begun the process of obtaining the necessary regulatory approvals to conduct business, and has filed an application with the Pakistan Telecommunication Authority (PTA) to secure the licence, according to the notification.
The Samsung Mobile Devices manufacturing facility will be located at LMC’s existing plant facility in the Bin Qasim Industrial Park, Special Economic Zone, Port Qasim, Karachi.
The manufacturing facility is expected to be completed by the end of December 2021.
According to a Topline Securities report, the investment size is rumoured to be around $100 million (Rs. 16.4 billion), as a result of which LMC is expected to generate average earnings (EBITDA) of Rs. 15 billion over the next two years.
According to the report, the production facility will generate $300 million to $600 million in annual revenue, with the project generating net profits of Rs. 1 billion to Rs. 1.5 billion in its early years.
Tundra Fonder, a Swedish asset management consulting firm in frontier markets, said on Friday that “despite being the fifth largest country in the world, it has taken the new government a lot of time and efforts to convince foreign manufacturers.”Pakistan appears to have passed through that major barrier.Expect more of these headlines in the future.”
“The main benefit of local production is not the FX savings,” he explained.
Instead, it is the transfer of technical knowledge and the enhancement of the human capital base (the NPV of future salaries rises with higher value-added employment).”
According to the company’s Specialist Asset Manager, “Pakistan imported around 35 million mobile phones in2020, with a mobile subscriber base of approximately 185 million people” (up from 28 million in 2019, and 17 million in 2018).