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Published on July 25th, 2007 | by Muhammad Farooq


Warid has something to singtel about…

Rumors started to surface back in May that Warid Telecom, Pakistan’s third largest mobile operator is in talks with several foreign firms, including Singapore Telecommunications (Singtel), to sell a minority stake. This week, Abu Dhabi-based Warid Telecom Group International has confirmed the sale of a 30% stake in its Pakistani operations to SingTel, in a deal worth USD758 million. Warid, started operations in 2005 and as of end June has around 10 million customers in Pakistan; a market share of roughly 17 percent.  

Pakistan telecom market 

With a large population in excess of 160 million growing at over 2 percent per annum, and a young median age of 20 years, Pakistan represents the sixth largest population base in the world. Its mobile phone sector has been growing at a rapid pace, with the number of subscribers reaching 58.4 million at the end of April (around 35 percent of the population) from only 12.8 million in 2005. In the presence of a freeze on new licences, the only way for international telecoms companies to get a foot hold in this lucrative mobile sector is by picking up stakes in existing players. Last year, mobile operators invested US$2 billion in Pakistan, 54% of the total foreign direct investment in the country, according to the Pakistan Telecommunications Authority (PTA). Pakistan telecom market is still a bargain compared to some other markets with less customer bases. There is a strong potential for growth in subscriber base; evidence of which is repeat attempts by foreign operators to get a slice of this pie.  

First Try:

Previously Etisalat of UAE acquired a controlling stake in PTCL beating China Mobile and SingTel with a purchase price of US$2.5 billion. The price offered by China Mobile was US$1.409 billion and SingTel US$1.167 billion. Other ‘firsts’ by Gulf shoppers include Omantel’s purchase of World Call and Qtel’s purchase of Burraq Telecom.

Second Try:

China Mobile, the world’s biggest mobile phone company, which had earlier failed to buy PTCL, bought 89 per cent of Paktel for $284m, its first acquisition outside its home market (even though Paktel was losing money at the time). This was a blessing in more than one way, since reports suggested that weeks before the takeover, Millicom was preparing to close Paktel down. It owed $29 million in licence fees to the Pakistan government at the end of 2006. China Mobile immediately announced plans to pump in $400 million to beef up the network; the lion’s share went to Ericsson and Alcatel-Lucent.

Second Try:

SingTel has expanded its footprint to 20 countries and Pakistan, Asia’s fastest-growing mobile phone market after India, was always a desirable target. It too like China Mobile failed in its first attempt to buy a stake in Pakistan Telecom (SingTel was the third highest bidder). No wonder this time around, it was more aggressive. SingTel’s other investments include stakes in operators in Australia, Thailand and Indonesia, and a 30 per cent holding in Bharti, India’s leading mobile phone group. 


It seems like the other contenders were not hungry enough. So what kept Britain’s Vodafone Group and Kuwait’s Mobile Telecommunications Co. (MTC) at bay; was it that Warid was not willing to sell a controlling stake or to give up its brand, which are both important to Vodaphone – or was it the asking price which might have been too much for MTC which just coughed up over US$6 billion for the third Saudi mobile licence, or was it Warid’s less than perfect performance over the recent past?  


Hoping to repeat the early success of Pakistan mobile market, Warid ventured into the Bangladesh market on its own, taking pricey Ericsson as its technology partner with it. From the beginning, it got a lukewarm reception; apparently the customers viewed it more as a Pakistani company invading Bangladesh than a UAE group from Middle East. The company has been late to reach new markets, being the sixth mobile operator in Bangladesh, the fifth in Uganda, and the fourth in Congo. The result has been higher initial infrastructure and marketing costs as the company seeks to compete with well-established incumbent operators. It shelled out US$450 million in licence fees and infrastructure costs in Bangladesh, and committed to a further investment of US$300 million over the next three years in pursuit of its objective of reaching ten million subscribers in 2009. Being an average sized mobile network operator it felt a need to link up with a larger international company after its not so successful venture into Bangladesh. In other words, it would have been very difficult, if not impossible, for Warid to further grow internationally alone. 

There has been a decline in Warid’s performance in Pakistani market in recent months, taking the wind out of its sails, after all it had a highly successful launch (which it was NOT able to repeat in the crowded Bangladeshi market) in 2005 in which it added over four million subscribers in the first year. The company would have shortly been downgraded to fourth place by Telenor Pakistan if the current trend had persisted.SingTel is already vigorous in the Bangladeshi mobile market with a 45% stake in Pacific Bangladesh Telecom Ltd (PBTL), the operator of the country’s third largest network CityCell. If permitted by the regulatory authorities, a partnership would benefit both companies. Warid would get a Bangladeshi customer base of over 1.2 million, while SingTel would be able to move its customers from CityCell’s current CDMA network to Warid’s more modern and cost-effective GSM infrastructure.For Singtel, this partnership at its minimum mean two things; understanding (if not immediate involvement) to the Middle East markets, which are being labelled as the most lucrative in the world as well as a foothold in Pakistan.

So it is safe to say that second time is the charm in Pakistan mobile market; at least it has been for China Mobile and Singtel :–)

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One Response to Warid has something to singtel about…

  1. Atif Tahir says:

    very true, but so far China Mobile’s entry has not been felt and they have not unveiled any aggressive move or brand revitalization or corporate reengineering which was much expected of them. Author is right, even anyone’s entry in Pakistani market will also be considered late, already there is stiff competition and cost of entry will be at stake of number of years to get stable and profitable. But my experience with companies, where strategic management is run by chinese either from mainland or singapore or malaysia, their generic corporate level philosphy is to invest, get break even and then re-invest, without considering local business models. if it is not a new business opportunity and they are purchasing or acquiring a business on the run, first thing chinese would do is to start eliminating all type of expenses even marketing communication, management restructuring will be another objective.
    Anyways, only time will tell that how this strategic move turns out but in any case strategic decision should be taken fast, otherwise it will be much difficult for Warid to catch Telenor in Pakistan, no matter how they perform in Bangladesh.

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