State of Telecom Industry in Pakistan

As we cross the midyear mark, CMPak Limited remains one of the most interesting mobile companies in Pakistan (see my past story from last year). Yes, they are late in the game of foreign acquisitions in emerging markets. Yes, Paktel has below 2% market share in Pakistan. But CMPak has huge amounts of cash. Some people have even questioned: why are they here? Well, they had to start somewhere and even if they don’t make big bucks in Pakistan it provides a great learning opportunity. Besides, who does not want to play in a growth market?

Re-branding, investments and price war seems to be a dominating theme for CMPak formerly known as Paktel. I am not sure when will they start phasing out the Paktel name and logo as many of their campaigns still show Paktel. Can someone shed more light on this?

The big news in the initial months were the announcements of capital investments deals with combined worth over $1 billion with Alcatel and Ericsson, discussed by TM here and here. Then came the first promotional Power Package- 50 paisas, which I consider a good start … Let the paisa wars begin! My only complaint is that the strings attached with such packages - and this applies to ALL mobile companies - can be too complicated for consumers to grasp - see if you can make sense of this tariff summary page from PTA. As TM points out:

the prices have come down to a point where the marketeers of the services can bring in the 50 paisa mention in their sales pitches with fine prints telling us that this is for 30 seconds, on-net and/or for a (predefined) user groups of friends and families.

Now lets talk about the overall strategy of CMPak, rebranding work and what about jobs?

To start with, China Mobile is the largest wireless carrier in the world in terms of subscribers and second largest in the world in terms of market value ($185 billion) so it can potentially benefit from its scale. It has experience of dealing with falling ARPU from China and has the capacity to compete on rock-bottom prices. However it is unclear on what are its plans for 3G. Its history as a government run monopoly till recently makes some people believe that it is not as business savvy as other global run telecom companies. According to an article in Flare:

China Mobile, a hardly-reconstructed former government department, falls into the category of a government run enterprise. The record of incumbent telecom companies abroad is an unimpressive one. Not least among the reasons for failure were the inability to adapt to the role of challenger and the unfamiliar regulatory and cultural environment.

No senior Mobile executive has experience of any market outside China. Few speak English to any extent. The strength that CM will bring to Pakistan, where 70% of the population lives in the countryside, is its rural experience. It has won business in western China by deploying low-cost networks, and selling handsets for as little as $38 with low-denomination prepaid top-up. This year CM has put itself on a learning curve, but to succeed abroad it will have to defy history as well as its own legacy culture.

With the acquisition of Paktel and injection of cash there was hope in the market that many jobs will be created. However the job situation is still uncertain. I’ve heard that technical jobs for locals have not been announced yet and Chinese engineers have been brought in. Even the website says: No jobs opening available right now!

Talking about websites, I was a bit disappointed by the quality of CMPak’s website . Anything beyond the home page is mediocre at best. I found plenty of stale content and inconsistent design which leads to poor usability. Telenor sets the bar when it comes to online experience. For Paktel, a fresh site with upated content should have been an important part of their rebranding. For now I’ll give them the benefit of the doubt and hope that CMPak will soon fix their website.

Picture from Paktel site shows Mr. Guo Yonghong, CEO, CMPak and other executives at Chamber of Commerce in Karachi.

Today marks a year of blogging about Pakistan Telecom at TelecomPk. Here are some of the topics and stories covered in the past.

Growth of Pakistan mobile sector, Pakistan’s position as a top growth market in the world and the challenges of growth markets were other popular thread with many posts.

Here are some of the other posts: