State of Telecom Industry in Pakistan

A detailed report from Universal McCannon social networking trends shows that Pakistani users are fast adopting social networking. The popularity of social networking in Pakistan is no surprise, given the high numbers (percentage and overall) of youth, growing access to Internet and a culture inclined toward sharing and social activities. The telecom reform and subsequent growth of access to social networks through Internet and smart phones has contributed to this. For example, look at the number of blog readers and social network participants. This number could be much higher if a) obstacles to broadband could be removed and b) an Internet exchange is developed within the country and c) useful local content generation is encouraged.

According to PTA numbers, mobile subscriber growth across Pakistan declined slightly in November 2008. After many years of explosive growth this is the first decline. Although the dip is a small one (-118K users), but it is an indicator of the difficult environment for the telecom market. However this does not mean that all companies are losing customers. Mobilink is the only one which lost market share (over 827K) while Warid added over 244K users, Telenor added 240K. Ufone and Zong added subscribers as well. Total number: 90.4 million.

Telenor took a big step seven years ago when it decided to expand in international markets. At that time Telenor was just another midsized European incumbent telecom operator. That strategy of international investment paid off and now Telenor is the 7th largest mobile company in the world. The impressive part is that Telenor has not sacrificed margins in the race for growth. Many of Telenor’s competitors – Vodafone , Deutsche Telekom – have started to emulate its strategies. Let’s take a look at the critical success factors and what can be learned from this.

Forrester Research did a case study on Telenor and praised its strategy and execution. The key take points include: right time, targeting of emerging markets, policy of full management control (avoided joint ventures) and deployment of a repeatable methodology (for example the djuice brand).

Over the past seven years, Telenor — the incumbent telco in Norway — has transformed itself from a small operator with limited opportunities in a tiny country into a major global telecommunications group. How? By leveraging repeatable strategic methodologies and pursuing an innovative twin-track geographic strategy. While rivals were investing in developed economies, Telenor focused on making money in emerging markets — and timing this investment when they were experiencing explosive growth in mobile. Telenor has been so successful that competitors are now copying its approach. Vendor strategists can learn from Telenor that size need not be an inhibitor: What matters most is the right strategy, at the right time and precision in execution.

How did Telenor decide to invest in Pakistan? According to a presentation by Telenor it identified 5 criteria before entering Pakistan:

1. 1. High growth potential
2. Forward looking telecom policy
3. Investment friendly climate
4. Good regulatory execution
5. Acceptable political and economic situation

These are all excellent points and are stated very well. Luck was on its side as well. Telenor came to Pakistan in 2005, during the telecom boom and the growth exceeded its own expectations and projections.

Telenor sees many opportunities, now that it has network and grasp on the market. It is working on new strategies which include a focus on mobile Internet, mobile broadband and diversification in new directions and regions. It has acquired a microfinance bank, which will be an interesting development to watch. Telenor has also entered the Indian market by taking a stake in Unitech Wireless.

Here’s the outlook for Pakistan by 2010-2011 shared by Telenor with its investors:

• SIM penetration over 70%
• Market share above 25%
• EBITDA in mid thirties
• Capex/sales belwo 25%

A word of caution though – the network quality is something Telenor needs to keep working on.

Ufone is little late to the USB mobile Internet game but it has come up with the best offer yet: The USB stick is Rs.6999 and you get first 6 months free. What will be the first year cost for the so called “unlimited”  mobile Internet for different companies?

• Ufone: Rs 6,999+6 free months+Rs.3000(500*6) = Rs.10,000.
• Zong: Rs 10,000+Rs.4800(400*12) = Rs.14,800.
• Telenor: Rs 12,700+Rs.6000(500*12) = Rs.18,700.

It is clear that after the initial investment on the USB and the promotional period, the monthly cost is not that different and therefore the connectivity and download speed should be the deciding factor.

Ufone UrEDGE works with both prepaid and postpaid and is available in many cities. Unlimited data download – which is 1.5GB per month for Ufone – is also available. Details at Ufone website. This will be a great option for those who waited for a better deal or those who don’t get good coverage for Zong or Telenor.

The first question is – what happens after 6 months? Here’s an example of the rate plan. I found the validity of 15 days to be annoying because if you do not use your volume it may be wasted. Note that it is Rs. 500 for 1.5GB  package, also marketed as the Unlimited package. Complete packages & tariff details can be pulled by sending SMS ‘info’ to 800.

There’s not much feedback available about Ufone’s download speeds. If you are a user, please share your experience with others who can benefit from your feedback.

Recycling is a very important factor in creating a sustainable future given today’s high consumption lifestyle. However recycling of gadgets such as cell phones is below where it should be. A recent study by Nokia showed that consumer awareness is a major issue which results in lower levels of recycling. In Pakistan – and other developing countries - most phones are sold over and over again as there is demand for old and cheap phones. Many used phones from the developed countries also end up in developing countries and I think more awareness and education about recycling can help there. Below is some information from a recent Nokia survey on recycling trends.

Only 3% of people recycle their mobile phones despite the fact that most have old devices lying around at home that they no longer want, according to a global consumer survey released by Nokia. Three out of every four people added that they don’t even think about recycling their devices and nearly half were unaware that it is even possible to do so.

The survey is based on interviews with 6,500 people in 13 countries including Finland, Germany, Italy, Russia, Sweden, UK, United Arab Emirates, USA, Nigeria, India, China, Indonesia and Brazil. It was conducted to help Nokia find out more about consumers’ attitudes and behaviors towards recycling, and inform the company’s take-back programs and efforts to increase recycling rates of unused mobile devices. Read more »

Pakistani government in the past few years has tried - unsuccessfully - to get a foreign manufacturer to come to Pakistan to build handsets. See a related post and another one here. I recall seeing a statement almost every year. Well, here’s another one for 2008. The discouraging factors include the chronic dismal conditions of energy, infrastructure and security. The only hope for this time is that Chinese companies such as China Mobile and Huawei have a big stake in Pakistan. The investment for these large companies is not that big and they can earn a lot of goodwill and PR from setting up a phone manufacturing facility. A cheap phone and SIM combination could be too much to resist for some!  

Federal Secretary for Information and Technology Hifz-ur-Rehman informed the media Government is negotiating with Chinese companies to set up manufacturing plants for cell-phone sets in Pakistan. He said that government is negotiating Chinese cell-phone companies including Zong, China Mobile and Huawei to set up manufacturing plants of handset in Pakistan.

He said that President Asif Ali Zardari during his visit to China had taken up the issue of setting up manufacturing plants of cell-phone handsets in Pakistan. He said that Pakistan was spending $500 million to $800 million annually on the import of mobile sets and manufacturing plants in Pakistan could result in saving valuable foreign exchange. He said that duties on mobile sets had been imposed to enhance revenues.

Khaleej time ran this story, a verification to my earlier posts about the robustness of the telecom sector in Pakistan. Excerpts below.

After several years of major investment — a good deal of FDI inflows, including those originating from United Arab Emirates — has put telecoms on the fastest growth track. The investment in fiscal 2008 was $3.1 billion compared to $4 billion in 2007.

The new inflow in 2008 includes $2.3 billion in cellular segment alone. The foreign direct investment (FDI), in the telecom sector was $1.4 billion or 28 per cent of the overall FDI inflows. It was the second highest in overall FDI inflows into Pakistan. FDI in 2007 in telecoms was $1.8 billion or 36 per cent of the overall investment of FDI in 2007. The FDI in the sector, for three years, between 2004 to 2007 was the highest in total FDI inflows.

On LDI sector.

The Long Distance International (LDI) Carrier Services, for instance increased by 40 per cent to 178 in 2008, as against 127 per cent in 2007, calculated on the basis of total Point of Presence (POP).

The LDI revenue, excluding that earned by Pakistan Telecom Corporation Ltd (PTCL), formerly the state monopoly, but which is till 74 per cent owned by the government, rose 42 per cent to Rs22 billon — up from Rs15 billion in 2007.

The PTA states the investment in LDI was $390 million in 2008, or 35 per cent less than 2007. Its 77 per cent contribution was from Link Direct at $300 million. The LDI also recorded its outgoing traffic at 1.66 billion minutes which was 31 per cent more than 2007. The LDI incoming traffic grew by 163 per cent to 5.5 billion minutes — against 2.0 billion minutes in 2007. Most of it was routed from UK which accounted for 37 per cent, and United States sharing 28 per cent.

Tough economic conditions require some incentives to be provided for SIM buyers Pakistan. And what’s better than a refreshing cold drink to go with your new SIM?

Photo credit: To the enthusiasts at Telecom Grid Pakistan.

Guest Post By Abhay Singhal, Co-founder and Head, Global Ad Sales at mKhoj.

The new millennium has seen an exponential growth in spending on digital media and a gradual decline in conventional media across the world when it comes to advertising budgets. The key to a successful advertising campaign is all about achieving the right balance in types of media to reach the target audience in the most efficient and cost effective manner.

Digital media stands out for its capacity to connect to the audience due to the content and level of interactivity thus driving up attention span and engagement levels. Digital media such as Internet and mobile are continuously taking a bigger chunk of the advertising budgets. Currently the budget assigned for the digital media is less than 3% of the total budget for advertising. The interesting thing however is that it is projected to double to 6% over the next two years. Today no campaign can be considered complete without a digital component. The digital medium has the inherent capacity of being transparent, low upfront cost and being creative. With the advent of computers advertising took a new turn, the factor of measurability came into picture. This gave the advertisers an edge on taking brand messages to the right consumers. The Returns of Investment could be measured better.

Off late different devices that an individual is exposed to (mobile phones, MP3 players, PDA, PCs etc) are becoming interconnected but the mobile phone is emerging as the winner in terms of time spans and engagement levels in the advertising industry. This is especially true in regions where PC penetration is low. Mobile has the innate capacity to target individual customers. Its ability to customize, optimize, amuse, innovate and deliver content on demand makes it play an outstanding role in the new world of the individual. Today this has gone a step ahead with the advent of mobile advertising. This medium has made advertising even more personal and targeted.

Mobile advertising has come a long way over the past two years. The reason for this is brand managers are facing the challenge assisting sales persons of acquiring potential customers with a lower cost, which means that sales persons are expected to find leads that are higher quality that have more affinity to the brand. This is where the ability of mobile advertising to segment, expose, engage, close the loop of transaction and measure the impact, comes into picture. Many companies that had not tried out mobile advertising as an advertising channel are taking their first baby steps. They are getting jaw dropping results, which they are then using to spread the word. Mobile as a channel for advertising is consuming a bigger chunk of the budgets.

So what does mobile advertising encompass? Mobile advertising primarily consists of either reaching out to customers while they are surfing the Internet from their mobile phones or by using SMS. SMS is rather intrusive and non-engaging and thus brands don’t prefer SMS advertising. Mobile Web advertising is fast becoming the key method to reach customers and it has two components in this value chain apart from the advertisers; the Publishers (mobile site owners) and the mobile ad networks (like mKhoj). Publishers are those who are owners of mobile Internet sites having traffic on these sites and who earn money by selling ad space on their sites. Mobile Ad networks, like mKhoj, bring together advertisers and publishers and provide the technology to target the ads to appropriate customers and give better RoI to advertisers.

Taking this a step ahead, mKhoj as a platform for mobile advertising offers advertisers precision targeting based on various parameters so that the right audience is targeted. mKhoj delivers specific insights to the demographics of the consumers and measures the effectiveness of the campaign to ensure the best ROI. On the other hand, mKhoj offers publishers better ad inventory, higher ad variety so that the fill rates are high thus enabling the publisher higher revenue. mKhoj has a lot of advertisers which compete among themselves to take the best ad spot, thus ensuring the publisher good returns and better fill rates.

Read more »

The Nokia World event was held in Barcelona a few days ago. The world watched as Nokia — the largest cellphone manufacturer, with a 38% global market share — made new product announcements and unveiled its approach to attract more first-time users. There was N-97 mobile computer, new Maps on Ovi and Mail on Ovi which went live worldwide on December 22. This week Nokia also announced that it is introducing single sign-on for Ovi.com. This eliminates the need for maintaining multiple user accounts for various services (such as Share) and makes for a much better user experience. Ovi.com, which means door in Finnish, is a collection of all of the handset makers services, built from its purchases of some dozen companies.

Nokia’s focus is clearly on transforming the Internet experience through mobile phones, for both experienced and first timer users. Parallel to all of this is the planned Symbian Foundation which is focused on developing an open source platform for mobile devices built on Symbian OS. Combined with the lower priced handsets we talked about earlier, this makes for a strong product portfolio for Nokia.

“This is a world where you will have the power to tailor and personalize your Internet how and when you like, to make your day-to-day life easier and more fulfilling.” CEO Kallasvuo noted that Nokia, with more than one billion customers globally, has the opportunity to put the power of the Internet into the hands of more people in more places than any other company, “and that’s what we intend to do.” Nokia’s global scope, assets such as NAVTEQ and a growing list of Ovi services, “uniquely position Nokia to transform the Internet to become a more personal and relevant part of our lives. And that’s a claim no legacy Internet company can make.”

Internet is not the only target. Email is another killer application and it is estimated that 75% of the world’s population has not yet used email.

Read more »

News was in from the beginning of the year that by the end of 2008 PTA will auction licenses for 3G. With the year coming to the end, we have not seen this happen. But now with a two-day workshop on 3G (UMTS/WCDMA) Network Planning, it looks like PTA has laid the foundation for licensing the 3G spectrum early next year.

The workshop was held in association with Qualcomm Inc, USA and Central Asian CDMA Forum at PTA headquarters, Islamabad from 4-5 December 2008.

PTA has assured the telecom industry for its full support and cooperation for the introduction of new technology and to provide level playing field to all the stake holders. On the occasion of closing ceremony, Chairman PTA Dr. Mohammed Yaseen distributed the certificates to the participants of the workshop.

The workshop was conducted by telecom experts and Qualcomm certified trainers Mr. Syed Umair & Mr. Muhammad Arif Khan. The training session covered various areas of 3G WCDMA/UMTS wireless technology including Network consideration, Coverage, Uplink and Down Link Budgets, Propagation, Traffic and Capacity, HSDPA and HSUPA considerations, Network Dimensioning and Tool overview.

Representatives of Mobile phone operators, telecom companies and vendors attended the workshop on 3G.

It may be noted over here that MTNL (Indian Operator) has already launched 3G in few areas of New Delhi and is expanding it steadily to country-wide level. Bangladesh also plans to roll-out 3G services in the coming year.

Reference: PTA website

As mobile devices become powerful and act more like portable computer, they also inherit the risks usually associated with computers. Here’s a video with some information on how to protect your smartphone against different types of hazards.