swot analysis of telecom sector

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Preface

Data presented in this booklet is gathered while working on a project of marketing regarding SWOT analysis. It includes analysis of telecom industry in Pakistan. We (group members) surveyed regional offices of various mobile companies and tried to ascertain their point of views regarding the industry and what they think at what position their company exists. Following offices were visited and we are thankful to representatives of respective companies for their help and time.

1. Telenor.2. Warid Telecom.3. Zong.4. U fone

In addition to this for a broader view, reports were also obtained from Pakistan telecommunication authority (PTA).

Truly, because of this project we gained practical knowledge of marketing. For this we are highly grateful to Sir Hamad Shah and dedicate it to him.

Modern Thinkers Group

Prepared by Modern Thinker Group Created by Pervez Naul

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Name Roll No

Pervez Iqbal (Group Leader) 276

Shaher Bano 284

Ahmed Karim 252

Maria Nosheen 251

M. Imtiaz Hussain 265

Amna Amir 289

Mehwish Munir 296

Ayesha Sharif 293

Noreen Fatima 297

Table of Contents

Telecom Industry Analysis Report


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IntroductionGrowth of Telecom Sector in Pakistan

Cellular SectorI. Subscriber Growth and Penetration

II. Market ShareIII. CoverageIV. FinancialsV. Average Revenue per userVI. InvestmentVII. Tax on Cellular MobileVIII. Cellular Mobile TrafficIX. Average Tariff PackagesX. Mobilink TariffXI. CM Pak PackagesXII. U fone OffersXIII. Telenor InnovationsXIV. Warid Promos

SWOT ANALYSISQuestionnaireZong

i. Visionii. Missioniii. Company Backgroundiv. Organizational Chartv. Zong Pakistanvi. (Strengths, Weaknesses, Opportunities, Threats)vii. RecommendationUfone

i. Introductionii. (Strength, Weaknesses, Opportunities, Threats)iii. Call Rates

Warid Telecomi. Introductionii. The Warid New lookiii. Product and Servicesiv. Coveragev. (Strengths, Weaknesses, Opportunities, Threats)

TELECOM INDUSTRY ANALYSIS REPORT

INTRODUCTION


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Since the inception of Pakistan, basic telecom services were being provided by a

monopolist, previously called as Telephone and Telegraph department (T&T).

The department was being run by the government and played multiple roles as

regulator, policy maker, operator and service provider in the country. The T& T

department was later converted into a corporation. Although the corporation was

earning huge profits from the services, it was re-investing the same profits into

the sector for the provision of more telecom service but the investment was not

enough.

Further, with the technological advancement, more and more telecom services

were becoming available but there was not enough money available with the

corporation to install new telecom systems for the provision of modern services.

Resultantly, a digital divide prevailed in Pakistan keeping it behind its neighbors

and other comparable countries in terms of telecom access.

Cellular mobile services in Pakistan commenced in 90s when two cellular mobile

telephone licenses were awarded to Paktel and Pak Com (Instaphone) for

provision of cellular mobile telephony in Pakistan. Currently there are six cellular

players in the market.

There has been a tremendous growth in Cellular market. By the end of 2007

cellular mobile services were available in 7011 cities/towns and villages. LDI

segment witnessed blooming health during 2007 wherein telecom consumers

enjoyed cheap international dialing. Deregulation process of the

telecommunication sector of AJK and NAs that was finalized in 2006-07 resulted

in the award of licenses to five existing cellular operators. In 2007, PTA

established ITU Asia Pacific Center of Excellence (CoE) PTA node for Policy and

Regulations and conducted two training workshops for ITU members. In 2007

total teledensity in Pakistan has reached 52% which stands well above other

regional economies, of which the fixed line teledensity is 2.9% & cellular 48.4%.

GROWTH OF TELECOM SECTOR IN PAKISTAN


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Although tremendous growth has taken place in the Pakistan telecom sector but

most of it can be attributed to the cellular growth. Fixed line is still awaiting a take

off. Similarly Value Added Services have grown but are still a drop in the bucket.

Now that the competition has been introduced in the telecom sector some very

positive impact have been observed on the growth of the sector in a short span

of time which is expected to continue to grow for at least next five years if the

daring investors influx continue as in the last 3 years. A brief account of the

growth in telecom sector is given below.

Cellular Mobile segment of the industry is considered an engine of growth for

telecom sector in Pakistan. Cellular Mobile sector continued to add 2.1 million

subscribers per month during the year 2007-08. Cellular mobile operators

continued their aggressive marketing and network expansion. Competition

among operators became more intensive with aggressive entry of CMPak, a

China Mobile subsidiary in Pakistan. CMPak with their brand Zong and Telenor

have added significant subscribers very rapidly. Several cellular operators

offered various Value Added Services at lower rates to attract more customers.

The sector exhibited slow growth than year before. Cellular Mobile teledensity

jumped from 39% in 2006-07 to 54.7% in 2007- 08. Collective Revenues of the

sector have grew by 35% in the year 2007-08 against a record growth of 48% in

the year 2006-07.


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Cellular subscribers grew by about 40% in the year 2007-08, as against 82% in

2006 -07 and more than 100% during 2005-06. Main reason for its slow growth

could be the rising inflation which affects the affordability, higher taxes, saturation

of the urban markets and low tariffs. Regulator remained vigilant in resolving all

sector related issues. The most significant development was the shift from 7 to 8

digit numbering plan, which was completed during 2007-08. It was a huge task

and PTA took it as a challenge. Not only all cellular MSC but also all fixedline

switches have been enabled for 8 digits. It is consider as a great success of the

regulator for implementing it in short span of time. Verification of unauthorized

SIMs was another herculean task where tremendous progress has been made.

In collaboration with NADRA and mobile operators, PTA has devised a

comprehensive mechanism to verify the SIMS. It was observed that

approximately 7 million SIMS have not been registered properly who were warne

by PTA and operators were directed to register immediately otherwise face

disconnection. PTA launched a media campaign in this regard along with strong

warning has been issued to unregistered user if they failed to register their

connections, it will be blocked. Besides, PTA ordered closure of various

Franchises who were not implementing the proper procedure for issuance of

cellular mobile SIMs. PTA continued its IMEI system where it blocked number of

mobile handsets stolen or reported theft by users.

Driven by lowest tariffs, maximum coverage, and relatively better quality the

Pakistan mobile market maintained rapid growth during 2007. The newly

deregulated mobile market is now working on sustaining the mobile boom that hit

Pakistan 2 years back and on the brink of adding Value Added Services to

increase ARPU along with customer satisfactions. Steady growth saw addition of

more than two million mobile subscribers every month throughout the last year.

Network coverage of almost 90% of the total population of Pakistan has made

mobile industry even more attractive for foreign investment. Pakistan has

emerged as one of the fastest growing mobile markets among the developing

nations. This year the sector grew by 80% whereas average growth rate in last 4


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years has been more than 100%. Today total subscribers have reached 76.9

million (Dec 2007) whereas it was 34.5million in 2006 and 12.7million in 2005.

Figure-1 shows the subscribers growth of different Cellular Mobile Operators.

In Pakistan’s competitive and heated mobile market operator’s survival lies in

getting into new areas exploring new Value Added products, and providing better

quality of services. This is only possible by rolling out networks and be the first to

reach untapped population of the country. Out of 376 tehsils across Pakistan,

almost 77 % are covered with mobile networks, bringing the figure to 290.


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In 2004 there were less than 2000 cell sites erected by all mobile operators all

together for provision of mobile services. Today total cell sites of all mobile

operators are more than 17,500. Figure-3 depicts the number of cell sites of

Cellular Mobile Operators.

In 2007 the share of each company in mobile market exhibited a change, except

for Ufone whose subscriber share remained more or less the same.Mobilink kept

on loosing its share for another year in favor of Telenor and Warid despite its

secure subscriber base, whereas Paktel and Instaphone share in the market also

dropped as both companies are struggling with transitional phase. Figure-4

depicts the Cellular mobile operators share in the telecommunication market.


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Subscribers Growth and Penetration

Cellular Mobile segment of the industry is considered an engine of growth for

telecom sector in Pakistan. Cellular Mobile sector continued to add 2.1 million

subscribers per month during the year 2007-08. Cellular mobile operators

continued their aggressive marketing and network expansion. Competition

among operators became more intensive with aggressive entry of CMPak, China

Mobile subsidiary in Pakistan. CMPak with their brand Zong and Telenor have

added significant subscribers very rapidly. Several cellular operators offered

various Value Added Services at lower rates to attract more customers.

The sector exhibited slow growth than year before. Cellular Mobile teledensity

jumped from 39% in 2006-07 to 54.7% in 2007- 08. Collective Revenues of the

sector have grown by 35% in the year 2007-08 against a record growth of 48% in

the year 2006-07. Cellular subscribers grew by about 40% in the year 2007-08,

as against 82% in 2006 -07 and more than 100% during 2005-06.

Main reason for its slow growth could be the rising inflation which affects the

affordability, higher taxes, saturation of the urban markets and low tariffs.

Regulator remained vigilant in resolving all sector related issues. The most

significant development was the shift from 7 to 8 digit numbering plan, which was

completed during 2007-08. It

was a huge task and PTA

took it as a challenge. Not

only all cellular MSC but

also all fixed line switches

have been enabled for 8

digits. It is consider as a

great success of the

regulator for implementing

it in short span of time.

Verification of


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unauthorized SIMs was another herculean task where tremendous progress has

been made. In collaboration with NADRA and mobile operators, PTA has devised

a comprehensive mechanism to verify the SIMS. It was observed that

approximately 7 million SIMS have not been registered properly who were

warned by PTA and operators were directed to register immediately otherwise

face disconnection. PTA launched a media campaign in this regard along with

strong warning has been issued to unregistered user if they failed to register their

connections, it will be blocked. Besides, PTA ordered closure of various

Franchises who were not implementing the proper procedure for issuance of

cellular mobile SIMs. PTA continued its IMEI system where it blocked number of

mobile handsets stolen or reported theft by users.

Cellular Mobile sector has shown an impressive growth over the years. Pakistan

has been one of the fastest growing mobile markets among the emerging

telecom subscribers remained impressive for another year and all companies

together added more than 25 million subscribers to their networks. Total

subscribers crossed 88 million at the end of 2007-08. During the year 2007-08,

Telenor added about 7.4 million subscribers as compared to 7.1 million in 2006-

07. Mobilink comes second with the addition of 5.7 million subscribers during the

same period. Warid telecom succeeded to add another 4.8 million subscribers

this year. Ufone added 4.0 million subscr-ibers in 2007-08 as compared to its

addition of 6.5 million in previous year1. CMPak entered the cellular market with

aggressive marketing and infrastructure roll out. Its growth was negative previous

year but this year it added 2.9 million subscribers in last few months.

Cellular Mobile penetration in Pakistan reached 54.7% at the end of 2007-08,

which is 15.3 percentage points higher than the last year.

Despite impressive addition of cellular subscribers by operators during 2007-08,

Cellular Mobile market could not maintain its growth patterns of the last 3-4

years. Generally, the growth of subscribers has declined considerably in 2007-

08, which is evident in Table - 7. Total subscribers growth has been reported

40% in 2007-08, which has declined from 82% in the year 2006-07.


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Growth of cellular subscribers has declined by all major companies. Mobilink

growth declined registered

from 53% to 22% while

Telenor growth has declined

from 199% in 2006-07 to 69%

in 2007-08. CMPak has

entered the market recently

and has shown positive

growth. Cellular Mobile

Penetration in all provinces

has increased in last one

year. The province of Punjab

toped in numbers though its

total teledensity is second to Sindh. Total subscribers in Punjab at the end of

June 2008 reached 52 million compared to 37 million in 2006-07. Growth of

cellular subscribers remained highest in the province of Baluchitsan where

subscription grew by 57% in 2007- 08 with total cellular subscribers approaching

2.2 million compared. To 1.4 million in 2006-072. When compared with 2006-07


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and 2007-08, Cellular Mobile penetration has increased by 36.8 percentage

points in Punjab and its total teledensity climbed to 58.0% at the end of 2007-

08, which was 42.4% in 2006-07. A significant improvement in Baluchitsan has

been noted where its cellular Mobile teledensity has reached 27% in 2007-08

which was just 17% at the end of 2006-07. This improvement is due to the

special attention of regulator and Government of Pakistan for this province in

telecom sector in last year.

Market Share

Market share of operators is considered an important tool to gauge the level of

competition in any sector of the economy. Marker shares of Cellular Mobile

Operators indicate that market is moving toward perfect competition where the

share of major operators are declining and new entrants are able to grab more

share in the market. During the year 2007- 08, Telenor has emerged as fastest

growing operator who has improved its market share from 17% in 2006-07 to

above 21% slightly higher than Ufone who also has 21% market share. On the

other hand, the leading mobile operator,


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Mobilink is loosing its Significant Marker Power place rapidly and its share has

declined by about 5 percentage points and reached 36% in 2007-08 compare to

41% in 2006-07.

CMPak is also growing very fast and it has added 2.9 million subscribers, which

is an impressive number and one could hoped that in future it will grab more

market share. CM Pak has added more subscribers in last few months and it has

continued its aggressive media campaign along with infrastructure rollout which

helping it to grab more market share in short span of time.

Coverage

Low Average Revenue per User

(ARPU) and tough competition in cellular mobile market of Pakistan compelled all

operators to expand the

network rapidly so that they can

add more subscribers on their

network toimprove their

revenue. Currently more than

91% of the population has

access to cellular mobile

service all across

Pakistan though the access is

more in thickly populated

localities. Some areas of

Baluchitsan and NWFP

remained uncovered due to

disturbances in those areas;

rest of the country is almost

covered by now.


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To expand the infrastructure,

operators are rapidly installing new

cell sites all across the country.

During the year 2007-08 all

operators have added around 8,000

new cell sites, which is an

impressive figure because

it takes huge investments to install

the cell sites. Ufone has added the

highest number of cell sites in 2007-08 and that addition was 1,827 new cell sites

during 2007-08. With addition of these, Ufone total cell sites have reached to

3,471. Next was Mobilink who added 1,817 cell sites, its total sites stand at 7,339

which is the highest among all. Total Cell sites in Pakistan reached 21,518 which

were only 13, 752 in 2006-07. In terms cell sites growth, Ufone growth was 111%

while CM Pak growth remained 100%.

Despite aggressive cellular subscriber growth, franchises increased normally at

3%. During the year 2007-08, total cellular operators franchises increased to

1,679 which were 1,619 the pervious year. One reason for this slow growth could

be the closure of some franchises by PTA being involved in unauthorized sale of

SIMs which was causing problem of law and order in the country.

Other reason could be that expansion is going on unpopulated areas where the

operators already allotted franchises.

Financials

Financial health of the cellular mobile industry seems to be volatile and most of

the operator’s areoperating in loss though their revenues have increased

significantly over the last few years. The only operator, Ufone has reported profit

of Rs. 1.3 billion in 2006-07 who is not dependent on off shore loans and rapid

infrastructure roll out. Most of the operators are engaged in rolling out


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infrastructure and operators have to spend a huge amount on import of

machinery and equipments. Depreciation of

Pakistani currency has

further exacerbated the

financial position of the

industry. Particularly

those operators who

are engaged in rapid

infrastructure rollout

and dependent on

foreign loans from off

shore sources have to

bear loss due

depreciation of

currency. Depreciation of local currency has increased the cost of doing business

considerably. Moreover, low tariffs and increased tax rates could also be

responsible factors for low profit margins in the industry. However, the revenue

growth seems quite comfortable of all operators though it lower as compared to

previous years. In the year 2007-08, revenue grew by 35% compare to 48% last

year.

Among the operators, Telenor is the most efficient operator in terms of revenue

generation who has increased about 97% revenue in 2007-08 compared to

previous year and reported Rs. 45 billion revenues in the fiscal year 2007-08.

Mobilink earned about Rs. 80 billion revenues, which is 24% higher than the last

year. Mobilink and Telenor hold about 70% of the total revenues of the industry

while 29% is held by Warid and Ufone.

Warid and Ufone have 15% and 14% of total revenue respectively.


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Average Revenue per User

Average Revenue per User (ARPU) is an important tool to measure the financial

health of any telecom sector. The emerging markets of cellular mobile segments

in South Asia are considered the low ARPU markets. In Pakistan ARPU has

declined significantly over the years. In the year 2003-04, ARPU in Pakistan was

US$ 9 which has

declined to only US$ 3.1

in 2007-08. However, the

cellular mobile operators

in Pakistan succeeded to

maintain ARPU in 2007-

08 at the level of previous

year and reported only

3% further decline. ARPU

for Instaphone phone

declined by 57% which is

due to its transitional phase. CMPak’s ARPU has declined by 52% in 2007-08

which is due to its large expansion and low l eve l of subscribers. Mobilink's

ARPU declined to US$ 3.5 compare to US$ 3.8 in the year 2006-07. Similarly,

the

Telenor's ARPU declined by only 3% and reached to US$ 3.9 compare to its

US$ 4 in 2006-073.

Investment

In this competitive market, operators are bound to increase the investment to get

more shares of subscribers. In last 5 years, cellular mobile operators have


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invested over US$ 8.4 billion in Pakistan which has created large number of

employment

opportunities all

across the country.

During 2007-08,

Cellular players

invested over US$

2.3 billion, which is

12% lower than the

previous year. During

the year 2007-08,

Mobilink invested

over US$ 919 million

while Telenor

invested over US$

565 million. CMPak is another operator who started expanding lately and

invested over US$ 200 million in last few months. Warid and Ufone invested US$

480 and US$ 232 million respectively during the year 2007-08.

Taxes on cellular Mobile

In the current budget, government has increased the rate of GST on telecom

sector significantly and analysts are of the view that it may have an advance

impact on telecom usage and resultantly, the GST collection may drop

considerably from the

sector. So far, the

Government revenue from

telecom sector in terms of

taxes is increasing

continuously


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since 2004-05 after the liberalization of the sector. During the year 2007-08

mobile segments contributed more than Rs. 79 billion to national exchequer in

the form of taxes, which is 25% higher than the last year. In terms of GST sector

has contributed about Rs. 37 billion, which is 30% more than of the last year.

However, the growth of the GST collection from cellular mobile sector has

declined from 50% in 2006-07 to 30% in the year 2007-08. The main reason for

this decline in GST collection growth rate could be low tariffs, closure of over 10

million SIMs and increased rates of GST. However, the complete impact of

increased GST will be captured in next years because the rate has been

increased at the end of year.

Activation tax is charged @ Rs. 500/- per new connection and it has been the

major demand of the industry to remove this tax because operators are unable to

pass on this tax to consumers due to competition in the market. Activation tax

collection has increased from Rs. 17.57 billion in 2006-07 to Rs. 19.18 billion in

2007-08 which is 11% higher than the previous year. Among the operators,

Mobilink is contributing about one fourth of the total activation tax, which has

market share in subscribers over 37%. Telenor contribution was reported around

28% whose market share in total subscription is 21%. Ufone share in activation

tax was reported 16% while it has market share in total subscribers is similar to

that of Telenor. It indicates that Ufone addition is lower than the Telenor.

Withholding tax is an advance income tax, which may be adjusted at the end of

the year.

Cellular Mobile sector contributes a huge sum of amount in the form of

withholding tax to FBR. During the year 2007-08, cellular mobile companies

deposited over Rs. 23.2 billion, which is 33% higher than the last year. Mobilink

has deposited over Rs. 10.1 billion in this head, which is 44% of total WHT

deposited to FBR in 2007-08. Telenor's share in total WHT was 25% who

deposited over Rs. 5.8 billion during 2007-08.


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Cellular Mobile Traffic

During 2007-08, substantial addition of new connections, and introduction of

innovative tariff attractions have increased cellular mobile national and

international traffic by many folds.

International outgoing traffic by cellular mobile companies has increased by

102% in 2007-08 compare to 2006-07 while the international incoming traffic of

cellular mobile operators grew by 60% during 2007-08. In total cellular mobile

international traffic has increased by 70%, which is an encouraging number.

During the year 2006-07, cellular mobile operators terminated 549 million

minutes on foreign operators networks while foreign operators terminated 1.76

billion minutes on cellular mobile networks of Pakistani operators. In the year

2007-08, Pakistan cellular mobile industry terminated 1.109 billion minutes on

foreign networks while foreign operators terminated

2.82 billion Minutes in Pakistan. Last year total international traffic was reported

2.3 million while in the year 2007-08 this figure has raised to 3.92 billion minutes.


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Though cellular mobile companies have

offered low tariffs in domestic market,

they could not succeed to increase

domestic traffic significantly was the

case in for of international traffic. The

main reason for this slow growth could

be a strong competition between cellular

and fixed line industry offering low

packages to its consumers. Total

domestic outgoing traffic of cellular

mobile operators grew by 28% in 2007-08 compare to 2006-07. Total outgoing

traffic of mobile operators increased from

30.7 billion Minutes to 39.40 minutes. However, the domestic on-net outgoing

traffic of mobile operators increased 31%. Domestic traffic of cellular mobile

operators on fixed networks increased by 13%.

Telenor has presented the highest growth for international traffic among all

cellular mobile operators where its

growth was reported more than 300%

in the year 2007-08 compare to the

previous year. Telenor total

international traffic was 98.3 million

minutes (34.5 outgoing and 63.8

incoming), which has jumped to 396.7

million minutes in 2007-08 (160.2

outgoing & 236.5 incoming). CM Pak

comes second to Telenor for

international traffic in terms of growth that’s total international traffic has

increased from 22.70 million minutes in 2006-07 to 66 million minutes in

2007-08 representing a growth of 191%. Ufone's growth for international traffic

remained 103% while Warid growth was 76% in 2007-08.


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Mobilink growth was 45% while Insta reported negative growth of 43% in

international traffic in 2007 08.

In terms of volume of international traffic, Mobilink remained leader in

2007-08 as per its previous year's performance. In current year, Mobilink total

international traffic was 2.12 billion minutes (368.7 outgoing &

1,755.2 incoming) while previous year its international traffic was 1.48 billion

minutes (277.5 outgoing & 1,204.2 incoming). Ufone succeeded to keep second

position in terms of total international traffic volume where its total international

traffic was 783 million minutes (335.2 outgoing & 448.6 incoming) in 2007-08

compare to 384 million minutes in 2006-07.

SMS business grew very fast in last two years. Last year almost all cellular

mobile operators offered lucrative SMS deals increasing the SMSs many folds.

During the year 2007-08, cellular mobile operators generated more than 25

billion SMS, which shows about 200% growth in this segment.

During last two years the segment witnessed tremendous growth.

Attractive Tariff Packages

Since liberalization of the

cellular sector in Pakistan, the

tariffs declined tremendously.

Telecom regulator used to

regulate airtime tariffs of

cellular mobile operators

through price-cap prior to

liberalization and did not allow

operators to go beyond

ceilings determined by PTA.


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However competitive environment, the market forces are determining the tariffs,

which are, declining rigorously.

The operators are targeting different segments of the customers and offering

concessions and packages to these customers. Interestingly, the SMS seems

more attractive to operators for revenue generation where they offered lowest

tariffs during the quarter.

Mobilink Tariff

Mobilink, an SMP operator has reduced its tariffs for different packages.

Recently, Mobilink has also introduced Jazz One package in which its

subscribers can call at very attractive rates. Mobilink has reduced off-net tariffs of

Jazz Budget, Jazz Octane and Jazz Ladies First packages in February

2008. For Jazz Octane

package, on-net tariff has

been reduced from Rs. 2.50

to Rs. 2.40 per minute

whereas off-net tariff is

reduced from Rs.2.99 to Rs.

2.50 per minute. Similarly, off-

net tariff for Jazz Ladies First

package has also been

reduced from Rs. 2.99 to Rs.

2.50 per minute respectively.

Moreover, Mobilink introduced

“Apna Jazz Connection ON

Karein” promotion which was specifically made for those who did not get the

chance to experience lowered Jazz tariffs. Mobilink posted an unconditional Rs.

30 worth of balance for those who did not used Jazz connection since

Mobilink has offered three different SMS packages only its prepaid customers

where it has offered unlimited SMSes in 15 days for Rs. 50 and


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Mobilink also introduced Club subscribers who wanted redcarpet treatment.

Under this offer, Jazz subscribers who crossed the Red promot ion for i t s 100

SMSes for Rs. 15 in 7 days. for one month for Rs. 100, 500 from Mobilink to

Mobilink) to monthly usage threshold of Rs. 1,000 got 50% discount on all calls to

Mobilink numbers for the remaining days of the month.

CM Pak Packages

China Mobile launched three prepaid packages in April 2008. The details of their

packages are as given in Table - 12.

CM Pak is offering one free number in which subscriber can make free on-net

calls (from 12 am to 7 am) for a lifetime. Up to 10 family members can be added

in free package. Happy Hours has been offered in 12 Aanay Package which can

be modified once everyday. Charges for modification of Happy Hours are Rs. 5.

It has also introduced 8 Aanay ( 50 paisas) offer in which its subscriber can call

to other networks at Rs. 1.40 (for the first minute) and Rs. 1.00 per minute (from

second minute onwards). CM Pak offered 1,000 SMS per day with charge of Rs.

3.00 to its prepaid customers irrespective of the network.

U fone offers

Ufone has introduced ULoan where it has offered a facility to customers to avail a

loan in order to make an important call if and when they run out of credit. Uloan

facility is available only for voice calls. The loan amount will be deducted from the

next recharge e.g. UTop Up & Card Recharge.

Only customers with a balance less than Rs .2.50+tax can avail the ULoan

service. Recently, Ufone has enhanced Uloan amount to Rs. 5.00+tax. It has

launched “Paanch ka Pandrah package”. In this promotion, each 5 minutes call

gave the next 10 minutes absolutely free. In this offer, there are no daily charges


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and customer will be charged @ Rs. 1.125/30 seconds for Ufone to Ufone and

1.25/30 second for all other fixed and mobile networks. Ufone has recently

launched another promotion in which its prepaid subscribers can now call five

friends and family numbers absolutely free from midnight to 7 am by just paying a

nominal daily charge of Rs.1.99 (excluding 15% GST). Ufone also launched

unlimited SMS (up to 5,000 SMS) offer to its subscribers at Rs.150 to all

networks with 30 days validity. Through this promotion, Ufone subscribers can

share their thoughts, exchange jokes and chit chat with their friends. Ufone, in

line with other operators, has launched another package “Uwon” in which its

subscribers can call to any other Ufone number at Rs.1.00 per minute. Off-net

tariffs of Uwon package are Rs.1.60 per minute.

Telenor Innovations

Telenor launched a value-added service (VAS) by the name of 'Telenor Auto

Advance'. This unique service allowed Telenor prepaid customers to continue the

call even after their balance exhausts. The service was activated free of charge

for all Telenor prepaid customers.

Telenor Auto Advance Service can be extremely useful in emergency situations

where one call can make the difference. Subscribers on the move, far from a

recharge location or simply out of cash can benefit from this service. Under the

service, when a subscriber reaches the end of his balance, the call will continue

without disconnection and the balance will be adjusted in next recharge. Telenor

Auto Advance is only available for voice calls at the moment. Recently, Telenor

also launched Ask Telenor and Tele Doctor 1911.

Telenor launched free unlimited on-net calls offer (from 11 am to 2 pm) for limited

time period.

Service activation charges for the said promotion were Rs. 49 (exclude tax).

Telenor received overwhelming response on this promotion. Recently Telenor


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has launched SMS Fulltime offer for its prepaid customers in which its

subscribers can send up to 10,000 On-net SMS with charge of

Rs. 99/-.

Telenor's Djuice subscribers can now make free calls (from 1am to 6am) at 5

friends and family numbers with daily charge of Rs. 3.99. It may be noted that

call setup charge of Rs. 0.05 per call is also applicable for these free calls.

Warid Promos

Recently, Warid Telecom has launched Pakistan Package wherein its

subscribers can avail 50 free on-net minutes and 500 SMS/MMS for Rs. 15.00

per day. Warid also launched SMS craze in which its subscribers can send 2000

free SMS/MMS (on-net as well off-net) at Rs. 150/-. Sunday craze is another

promotion by Warid in which subscribers can make unlimited free calls on

Sundays from 8 am to 12 pm at a weekly subscription of Rs. 15/-. In infinite

craze, Warid subscribers can make free calls from 12 am to 7 am to one Warid

number and unlimited SMS/MMS from 12 am to 7 am across Pakistan with daily

charge of Rs. 10/-. In the period of last few months Warid has also offered

number of value added service to its prepaid customers that counts, Zem Talky,

Zem committee,


27


28

Questions to be asked from companies


29

Strengths

What makes you stand out from your competitors?

What are the major sources of your company revenue

and profit?

What is the market share of the company?

Is the company able to innovate?

Do you consider your team strong? Why?

What unique resources do you have?

What segment of society you target most?

Additional strengths

Weaknesses

What does your customer complain about?

In what areas is the company not able to recover the

cost?

In what areas do your competitors have the edge?

What are the biggest expenditures of the company?


30

Will the company be able to stand price pressure from

competitors?

What would you say about corporate standard of your

company?

Does the stock price history inspire confidence?

Opportunities

Is your company advanced in technology?

Is your company entering new markets?

What favorable circumstances are your facing?

Are there emerging trends that fit with your company’s

strengths?

What trends do you foresee?

What trends might impact your industry?

Threats

What obstacles do you face?

Are your competitors becoming stronger?


31

Are there emerging trends that amplify one of your

weaknesses?

Is changing technology threatening your position?

Do you consider government policies as threat?

What challenges can be turned into opportunities?

VISION

Zong aims to be a global communications leader, which provides the clients

worldwide with satisfying and customized products and services.

MISSION

Employee's career development and their benefits are highly concerned and

guaranteed to be growing along with the company's development at the same

pace.

Zong strives for the best return on its shareholders' investments and

assumes social responsibilities proactively.

To become a world leader in communications by 2008 and aims to be a world-

class excellent enterprise in 2015.


32

COMPANY BACKGROUND

Zhong Xing Telecommunication Equipment Company Limited was founded in

1985.

It is a multinational organization based in China. It is listed on the Shenzhen

Stock Exchange and the main board of the Hong Kong Stock Exchange. It is one

of the leading providers of high technology telecommunications equipment in

China.

ZTE's branch in Pakistan is situated in the I-8 Sector, Islamabad. The Group is

engaged in the design, development, production, distribution and installation of a

broad range of advanced telecommunications systems and equipment, including

wireless communications systems; wire line switch and access equipment,

optical and data communications equipment, handsets and telecommunications

software systems and services.It develops and manufactures telecommunication

equipments for fixed, mobile, data, optical networks, intelligent networks and

next generation networks.

The mobile products also include GSM and CDMA mobile phones and fixed

wireless terminals.

Over 10% of ZTE revenue annually is dedicated to the R&D aimed at enhancing

product quality, reducing cost, achieving higher sales and thus increasing return

on investment. Almost half of all ZTE personnel are involved in R&D, and ZTE

currently owns around 700 patents, with more than 87% of these being original

innovations.

In order to push boundaries even further, ZTE has set up 13 wholly owned R&D

centers worldwide and has undertaken research partnerships with electronics

giants like Texas Instruments, Motorola and Agere Systems.

ZTE's respected position as a forward looking global organization within the

industry is also reflected by membership of, and participation in, a variety of

International Organizations of Standardization.

ZTE was the first Chinese individual manufacturer member of 3GP2 (3rd

Generation Partnership 2) and has become a sector member of the International


33

Telecommunications Union (ITU).

ZTE is committed to the future of the telecommunications industry, and is aiming

to continue to develop and expand its global operations to ensure that partners

everywhere will have the most effective solutions both now and in the years to

come.

ZTE Corporation of China is one of the world's leading network solution

providers.

In 2003 alone, ZTE achieved revenues of RMB 25.19 billion and continues to

show year-on-year compound growth of more than 34%. which is a performance

unique in this industry in world terms.

ZTE is now China's largest network solution provider.


34

ZTE PAKISTAN (PVT) LTD

After acquiring the status of excellence in the domestic telecom market of the

China,

ZTE decide to compete in the rapidly growing international telecommunication

and IT arenas and immediately started embracing the successes in various parts

of the world in Mid 90s. One of the major achievements in the international

market was winning a 316,000 telephone lines turnkey project in Pakistan. This

project consisted of both Inside and Outside Plants and included all elements of

turnkey contract, such as provision of various types of equipment, installation,

construction, planning and designing of the Outside Plant network from the

exchange to the subscriber, civil work, testing, commissioning, maintenance and

financing of the turnkey project.

Having achieved such huge success in the international market and while

competing with Siemens, Alcatel, Ericsson and NEC etc. ZTE Corporation

decided to launch an independent subsidiary company in Pakistan. The

objectives for creation of ZTE Pakistan was to undertake the marketing, project

implementation, research and development, manufacturing of telecommunication

products, software development for both local market and export, and for the

purpose of provision of after sale support to the client.


35

In addition to the signing of 316,000 telephone lines contract, ZTE on October,

1998 entered into a transfer of technology agreement, whereby complete

switching technology in various phases spread over a period of five years will be

transferred to Pakistan. ZTE Pakistan creation was to ensure that in order to

implement the aforementioned technology agreement in its true spirit would act

as a career to complete the transfer of technology.

Under a separate contract it was also agreed that ZTE Pakistan would also be

Responsible for the training of engineers of PTCL and its own locally hired

employees to familiarize and develop expertise within Pakistan to meet their

present and future telecommunication needs.

In addition to the manufacturing facilities, its factory in Pakistan also includes a

Software Development Center. Since the inauguration of the factory,

ZTE Pakistan has been successfully winning contracts during the open

competition in Pakistan and Afghanistan Telecommunication markets.

In May 2001 ZTE Pakistan achieved another breakthrough in the private sector

by signing a contract with Telecard (Pvt) Ltd. Under this contract ZTE Pakistan

would provide Telecard with the latest technology of CDMA-WLL. The project

has been completed and it is now providing the telephone services in various

rural areas of Pakistan through the latest Wireless Local Loop technology of ZTE.

ZTE and Telecard have signed contracts for the expansion of the network in

2002 and 2003.

This is the first CDMA WLL network ever installed in Pakistan.

ZTE also won another project for the International Gateway and Satellite Earth

Station for SCO in AJ&K in June 2003. This project is in completion stage. ZTE

and SCO yet signed another contract for a 5000 lines GSM 900 network for

AJ&K area in March 2003 which is in operation. This project includes 100%

prepaid services.

ZTE signed another significant contract with National Logistic Cell for the optical

fiber transmission project along the Coastal Highway between Karachi and

Gawadar.

Paktel and ZTE signed an agreement for a GSM network for 2 million subscribers


36

in May 2003. This is considered a major breakthrough for ZTE Pakistan to

introduce its GSM product. This project includes 100% prepaid and post-paid

subscribers base.

ZTE Pakistan has established its State of the Art Training Center. It has trained

and passed out over 450 engineers from PTCL and other organizations, which

are now successfully

Operating and maintaining PTCL's network. In addition ZTE has employed over

250 young Pakistani engineers who are trained locally and abroad and this

number is increasing.

ZTE Pakistan has also got the Billing & Customer Care Project for PTCL current

communication, and also development of Software R&D centre in Pakistan.


37

STRENGTHS

• ZTE Corporation is the largest listed telecommunications equipment

manufacturer and provider in China.

• ZTE Corporation has been listed as an A-Share company on Shenzhen Stock

Exchange since 1997.

• In 2004 it was listed in Hong Kong Stock market.

• ZTE is included in the Top 100 Information Technology Companies by

leading US business publications, Business Week.

• ZTE is a total solution provider.

• ZTE has many turn-key project experiences.

• It is present globally and serving locally.

• It has a competitive pricing policy.

• ZTE has high credit prestigious brands.

• Their services are in co-operation with 150 operators in over 90 countries

around the world.

• ZTE's global CDMA handset sales volume exceeded 11 million units.


38

• ZTE's global DSL deployment has exceeded a capacity of 18 million units.

• ZTE commits over 10% of its annual revenue to R&D every year.

• ZTE has been granted over 1000 international intellectual properties.

• ZTE has the most complete telecommunications product line in the world,

covering every sector of the wire line, wireless and terminal markets.

• ZTE employs first-class people and provides world-leading training systems

and scientific methodologies.

• ZTE provides continuous training, career advancement opportunities and a

self-motivated work environment to its employees.

• The corporation has also launched joint laboratory partnerships with:

Microsoft (China)

IBM

Nortel

Intel

Accenture

Alcatel-Lucent

Cisco Systems

Texas Instruments

• ZTE's partnered operators are:

BSNL

Etisalat

Telenor

Vodafone

Reliance

Hutchison

Telefonica

• It is an active member of over 50 international standardization organizations

and ZTE has 4000+ domestic patents and over 350 international patents.


39

• ZTE's capacity of wireless network is over 150 million lines.

• It has 14 regional offices and 70+ countries branch office worldwide.

• It is the world's 3 rd largest DSL vendor.

• ZTE has its own university facility based in China. University considers the

customer's demand and provides multilateral training service to its employees.

More than 112,000 Chinese people have been trained and more than 40,000

foreigners from 90 countries have been trained. ZTE University has 132 Full-time

trainers and 500 Part-time trainers.

• ZTE has a corporate culture of mutual respect and is an excellent

service provider.

• ZTE maintains solid partnerships with its customers.

• It has broad product lines and strong technical support systems that can satisfy

all kinds of customer needs and adapt to ever changing market demands.

• It has strong R&D capability and wholly owned intellectual innovations and

property.

• ZTE was certified ISO 9000 award in 1995. It was the first certification awarded

to any telecom industry in China.

• ZTE has quality department and quality management system for each division

and it do not compromise on quality issue.

• It gives considerable importance to the process of 6 management. The

project 6 has saved up to $200 millions in 2002.

• In 2001-2003 it was awarded the Annual Award of Top 3 of Most Promising

Companies by Asian Business Association.

• In 2000-2004 it was awarded the Annual Award of Best Information

Disclosure Listed Company by Shenzhen Stock Exchange Hong Kong.

• Mr. Hou Weigui, Chairman, ZTE, was awarded "Top 10 Economic Persons in

China's IT Industry" in 2003 by China Electronic Information Industry

Development Institute.

• ZTE won the "Value Talents" Award issued by the Chinese Ministry of

Education in 2001.

• It was ranked fourth among the 289 Chinese state-level enterprise technical


40

centers in 2002.

• In 2003 the company was awarded the "Best Employer" title by Chinese IT

industry.

• In 2005, ZTE was included in the "Most Respectable Enterprise of China" by

Economic Observer Magazine.

• In 2006 ZTE was listed in China's Top 20 Brands.

• In 2007 ZTE was included in "The Top 10 Most Influential listed Companies in

China" for 3 years continuously by China Stock Com. This award has been

recognized as a crown award in China's capital market.

WEAKNESSES

• It is spending too much revenue on the training of its employees which is a risk

because the trained pool sometimes does not seems to be productive for

ZTE and chances are there that they may switch to other companies.

• The company is also losing out to competitors on the technology front as its

systems are very much prone to the virus attacks.

• Although it is growing very fast but at the same time it is losing its customers as

well because the competitors are chasing close behind.

• Although it is investing too much in R&D but its marketing skills are below

average.

OPPORTUNITIES

• It can retain its customers by improving its marketing skills.

• If it designs such software that will make the products less prone to viruses it

will help ZTE to hold a leading position in the major technology fields, such as

mobile communications, next generation networks, and data communications.

• The company can sustain rapid business expansion underpinned by growing


41

market shares in the GSM, CDMA and handset sectors.

• It can strengthen its ties with domestic mainstream carriers like China Mobile,

China Telecom, China Unicom and China Netcom for opportunities in the carrier

transition process.

• ZTE has an opportunity for increasing operational transparency and rapid

development of the home markets for 3G products, handsets and optical

communication systems as it is a total service provider.

• As there is a continued growth of the international market for communication

products it can grow by starting its operation in many African countries.

• The Group can strengthen and expedite research and development in order to

deliver products of top international standards.

• In the years ahead it can actively solicit high-caliber people on a global basis

and develop a pool of management personnel to ensure that human capital is

adequate to match its corporate development.

• It can establish a world-wide knowledge-broadcast system via the Internet.

• ZTE can establish a multi-way training system for domestic and overseas

customers.

• It can establish a world-leading corporate university in telecom field as it has a

university for its employees and of partners.

THREATS

• Competitors like Huawei, Alcatel and NSN can be a threat because they are the

main competitors of ZTE who are competing side by side to ZTE.

• External factors like political instability and economic instability which are

affecting the business environments.

• The devaluation of Pakistani currency against US dollar which results in loss for

the multinational companies as dollar gets expensive for them.

• The other threat can be the market saturation in terms of business opportunities

available in the conventional telecom business.

• Training the workforce and investing on them might be a threat to ZTE because


42

some employees may switch to other companies.

• Investing too much in R&D is also a threat.

• Divulgence of confidential corporate information can be a serious threat to the

company because ZTE has many competitive advantages over its competitors.

• ZTE might face problems because of the increase in the taxes.

• New entrants into the market pose serious problems to ZTE with lower costs

and good quality products.

• Growing bargaining power of the customers and suppliers.

• Changes in government policies.

• Changing stakeholder needs and tastes.

RECOMMENDATION

Recommendations are given on the basis of Porter's Five Competitive Forces.

Based on the information derived from the Five Forces Analysis, management

can decide how to influence particular characteristics of their industry.

PLAYERS:

If the rivalries between the firms are strong, competitive moves & countermoves

dampen the average profitability of the industry. As in case of ZTE who has

strong.

REDUCING THE COMPETITIVE RIVALRY BETWEEN EXISTING

Competitors so ZTE can avoid the threats of rivalries between its competitors by:

• Avoiding price competition.

• Differentiating their products.

• Focusing on different segments.

REDUCING THE THREAT OF NEW ENTRANTS:

New entrants add capacity, inflate costs, push prices down and reduce

profitability.

As ZTE is continuously facing the threats of new entrants so it should adopt


43

these strategies for minimizing the threat:

• They should create a stronger marketing / brand image.

• They should create more patents.

• Tie up with suppliers.

• Tie up with distributors.

REDUCING THE BARGAINING POWER OF SUPPLIERS:

ZTE suppliers exert a competitive force on the corporation as they have the

power of the raising prices, lowering the quality & curtailing the range of free

services that they can provide.

To avoid this:

• ZTE should opt for partnering with the suppliers.

• It should decrease its dependency on supplier.

REDUCING THE BARGAINING POWER OF CUSTOMERS:

Customers can bargain for price cut, they can ask for superior quality & better

service and they can also induce rivalry among competitors. If they are powerful,

they can depress the profitability of the supplier industry. To avoid these

problems ZTE should:

• Increase the loyalty of its customers.

• Should give value added services to its buyers.

REDUCING THE THREAT OF SUBSTITUTES:

Substitute products limit the profit potential of the companies by imposing a

ceiling on the prices. To avoid such problems ZTE should:


44

• Introduce such innovative products that are hard to be copied.

• Should switch costs as to reduce the threat of its substitutes.

Introduction

Ufone GSM is a Pakistani GSM Cellular service provider. It is one of six GSM Mobile

Companies in Pakistan and is a subsidiary of Pakistan Telecommunication Company,

The company commenced its operations under the brand name of U fone from

Islamabad on January 29 2001. U fone expanded its coverage and has added new cities

and highways to its coverage network. After the privatization of PTCL, U fone is now

owned by Etisalat. PTML is a wholly owned subsidiary of PTCL. Established to operate

cellular telephony. The company commenced its operations, under the brand name of

Ufone from Islamabad on January 29 2001.

During the year, as a consequence of PTCL's privatization, 26% of its shares were

acquired by Emirates Telecommunication Corporation (Etisalat). Being part of PTCL, the

management of Ufone has also been handed over to Etisalat. During the year July 2005


45

to June 2006, Ufone continued on the path to success. The Company further expanded

its coverage and has added new cities and highways. Ufone has network coverage in

more than 750 cities, towns and across all major highways of the country. During the

year Ufone successfully completed the network expansion of Phase 4 in existing as well

as in new cities and towns which amounted to more than US Dollar 170 million. As a

result the asset base of the Company has increased from Rs. 20 billion to Rs. 27 billion.

Future Plans Keeping in view the growth potential of the cellular industry there is no

option but to be aggressive in order to remain a potent force in the cellular industry. In

order to extend cellular network to new cities, towns and highways and enhance its

current installed capacities in existing cities, Ufone has finalized a huge network

expansion contract amounting to about USD 550 million, which will enhance the

subscribers.

capacity by 10 million. This is the largest ever expansion project of Ufone.

STRENGTHS

Ufone has network coverage in more than 750 cities, towns and across all major

Highways of the country.

Ufone provides International Roaming facility with more than 150 international

Operators across 79 countries.

Ufone is proud to have an efficient and friendly customer service through 21

company-owned Sales & Customer Service Centers and nearly 250 franchisees

across the country.

Ufone has always believed in a solid commitment to growth, security and

reliability. Therefore, Ufone has always balanced its expansion efforts and quality

of service. With a total current investment of $400 Million.

Utunes was launched on 4th Dec2007 which attracted many people towards u

fone.

U fone is offering the service of Multi-media Messaging Service (MMS).

As mobile users in the country have reached over 78 million at a very rapid pace,

Ufone has maintained itself as the 2nd largest cellular operator in Pakistan with a

subscriber base of around 16.5 million and a market share of nearly 25%. Ufone

has seen a subscriber growth rate of over 200% in the last year, and since the start


46

of 2005 Ufone added nearly 5 million subscribers onto its network. A remarkable

achievement indeed, especially considering the fact that two new international

players also entered into the market in 2005.

While keeping its tradition of being the trend setter in the industry, Ufone changed

the image of mobile phones from a luxury only affordable by the elite, to a

necessity affordable by the common man.

Ufone increased its focus on the youth segment (which comprises 50% of the

population), with the Prepay brand.

U fone has the ability to retain its existing customer base with a high level of

customer satisfaction via optimum network service and a 24 hour call center

facility.

It has the post paid service that is normally to attract the Business class people.

Most of the business and elite class people use post paid and other services offered by

the U fone.

Ufone has a subscriber base of 18.97 million as of October 2008.

U fone was the first cellular Company in Pakistan that introduced the service of

GPRS and hence took the competitive advantage.

U fone has some exciting and energetic SMS packages that made SMS almost

free. They are offering Rs. 25, Rs.50, Rs.100, Rs. 150 SMS packages which its

subscribers are really loving it.

U fone has some very exciting and low call packages like "5 ka 15" , "u-one", u

circle", " U fone ghanta", "U fone has some very exciting and low call packages

like "5 ka 15" , "u-one", u circle", " U fone ghanta", "U fone life package"and "

prepay Public Demand" etc which attracted lots of customers towards it and many

other cellular company users are also switching to it.

U fone post paid is also offering black berry set that is useful and tempting for the

Business class.

U fone currently caters for international roaming to more than 195 live operators

across 119 countries and introduced International roaming facility for Prepaid

subscribers in Saudi Arabia, United Kingdom, United Arab Emirates, Singapore,

Portugal and Kuwait with lowest rates, featuring no security deposit and

activation charges. GPRS Roaming facility is available with more than 75 Live

Operators across 59 countries.


47

WEAKNESSES

U fone does not have the proper lists of its customers. It has the list but this list is

not authentic which is increasing the unauthorized use of its sim specially pre pay.

U fone have to take serious steps to properly list its customers to ensure that

there is no misuse.

It has many franchises in the whole country but as its customers are increasing

day by day so its present franchises are not enough to fulfill the needs of it

customers.

U fone also face problems and its network get jammed on special occasions like

U fone has the problem of voice quality. Though its coverage area is vast and it

covers more than 750 towns and cities in Pakistan but the voice quality is not as

good as it should be.

U fone though has some unique and distinct services but it has not yet given

many innovative services as compared to other cellular companies.

U fone was the first to introduce the SMS packages but their packages are not

flexible enough and its charges are only on monthly bases while it should be on

both monthly and daily basis.

Call rates from u fone to u fone is very cheap but to other networks its rates are

expensive.

Its coverage on Southern part of Pakistan is quite good but in northern areas its

coverage is a bit poor.

In U fone web support is not available.

Its customers service staff need training because at many franchises their

employees are have been complained about behaving rudely.

If U fone company have to progress and grow in market it has to improve its

advertising campaign. Its advertisements are not good and eye catching.

Being the part of PTCL it has to face many problems like strike by employees etc.

When U fone came into the seen in Pakistan cellular market Mobilink was already

prevailing in the market and it was all Mobilink monopoly that time. Though with

the passage of time U fone took many customers of Mobilink but still Mobilink

has large number of users because it was first to Pakistan's cellular market and

this is the competitive disadvantage to U fone.


48

OPPORTUNITIES

U fone could develop some new and innovative services to attract customers and

some of the suggestions are as under which will help them to increase their

revenues

It should introduced International SMS packages like local SMS.

Already U fone is offering lowest International SMS rates but if

they introduce some package like this it will get lots and lots of

success.

They should also introduce some International call packages to

Middle Eastern countries because there are lots of Pakistanis who

are living in those countries so people will definitely be tempted

towards such package.

In " U fone ghanta" package time of the package should be extend

two more hours so that more & more people will use this service

and causing U fone to generate more revenues.

U fone should develop some new franchises in remote areas so that people will

get more and more benefit from it and it will help to increase their customers.

As in Pakistan Youth is almost the 50% of the population so U fone can take

advantage of this demographic situation and should introduce more and more

services and packages that attracts youth towards it.

U fone should extend its network coverage area to Northern part of the country

as well because in that part not too many companies are giving services and if U

fone give its service there then it will definitely attract people and its number of

customers will shoot like a rocket.

It should also introduce some packages for internet users on mobile if it do so

then many people will switch from other networks towards it.

If U fone enhance its voice quality then definitely it would be prefer more by

customers.

U fone should import technological equipments from China because they are

giving the best technology at very low rates so it will not only help U fone to be

ahead technologically but also will help U fone to decrease its cost.

U fone can surprise its competitors by introducing "U fone kiosk". These will be

ATM like machines and that will give 24-hour service to U fone subscribers to

load the balance just like they take money from ATM.


49

THREATS

As U fone is cellular company and there is cut throat competition among cellular

companies in Pakistan. There are six other companies also working in Pakistan so

U fone would have to face some growing competitive pressures.

Pakistan is facing some serious economic problems now days so that would also

effect U fone. The current recession in market is not good for any kind of business

including telecommunication.

In Balochistan and FATA where U fone already has network coverage is in

danger because of critical situation and operation being held there. Investment of

U fone is in danger.

U fone penetrated in the market from 2005 to 2006 quite rapidly but since then it

is experiencing a bit slower growth.

By the arrival of China Mobile Company (Zong) in cellular industry of Pakistan

the U fone and other companies now have to face the severe competition. As

Zong is introducing some various attractive packages of both SMS and calls to

attract customers. U fone have to develop strategies to counter their strategy and

to survive in the market.

The key threat to U fone is also some adverse Government policies of

implementing Tax on telecommunication industry that will ultimately affect the

revenues.

There are some rumors about the shares of PTCL in the market. Being the

Subsidiary company of PTCL, U fone will also be affected by that.


50

CALL RATES


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53

INTRODUCTION

Warid Telecom is a joint venture between Abu Dhabi Group & SingTel Group. Abu Dhabi Group entered into a strategic alliance with Singapore Telecom. Subsequent to this transaction in July 2007, telecom giant SingTel acquired 30% percent equity stake in Warid Telecom, Pakistan, for US$758 million. This partnership is part of a strategy to support Warid Telecom’s continued growth and to enhance its market position.

Abu Dhabi Group, one of the largest business groups in the Middle East and the single largest foreign investor in Pakistan. It has diversified business interests, offering strong financial resources and extensive management expertise that result in commercial success for several institutions.

SingTel’s investment in mobile operations include, Advanced Info Service (AIS) –Thailand, (21.4%), Bharti Telecom Group – India (30.5%), Optus Telecom – Australia (100%), Globe Telecom – Philippines (44.5%), Pacific Bangladesh Telecom (PBTL) - Bangladesh (45%), Telkomsel – Indonesia (35%) and Warid Telecom – Pakistan (30%).

The Warid New Look


54

o An evolution that strengthens the Warid identity while keeping the customers in focus

o Use of a more contemporary font & style to give a more approachable image

o This new logo encompasses the expanding reach of Warid not just in Pakistan but in an international footprint

o With our strengthened GPRS/EDGE network we would empower our customers to create their own life style networks

Successful of 789 by Warid contact center

Lahore: Warid Telecom, the country’s most popular cellular service in its continued efforts as a responsible organization, has proved to be at the top in successful implementation of PTA’s new pre activation regime. Effective from 1st of Feb 2009, all Warid new prepaid SIMs are being activated only when the subscribers dial 789 & have their personal data verified (in compliance with NADRA). The huge network of Warid sales channels that includes franchise and retail are selling inactive SIMs from 1st February 2009.

Warid has taken all the measures to ensure full compliance as required by PTA and the Contact Center is undoubtedly doing a commendable job to provide uninterrupted service for activation of new SIMs through 789. Since customer satisfaction has always been the top priority of the company, thus Warid is striving to provide its valued customers with a hassle free and pleasant experience.

Warid has one of the largest distributions channel and Contact Center network in the country, allowing it to offer wide accessibility and exceptional customer services across Pakistan. The successful launch of 789 by Warid Contact Center is a milestone achieved by both PTA and Warid. It will certainly help reducing the sales of illegal SIM and will be a positive step to decrease the crime rate in the country.


55

Product and services

Warid presents a wide selection of value added services that ensure you well manage your life via your mobile phone & express yourself effectively. The world of Warid Value Added Services has unlimited options of not only communication, but also convenience, entertainment & personalization. These services comprise a myriad of options from entertainment to utility based services. You think of it and we have it! Keep exploring & stay amused!


56

Coverage


57

Warid verses other mobile GSM provider companies in Pakistan

According to Warid representative

Strengths

1. Law call rates2. Best voice quality.3. Data services are very good.4. Coverage with quality.5. Project management Office (PMO) department is working in exceptionally good manner.6. Capable of providing third generation 3g services.7. Using BTS and BTR technologies. 8. Best billing system.9. Biggest subscriber’s bass of postpaid customers (1.5 milion active.

Weakness

1. Have some problem in billing system with respect to postpaid connections. 2. High cost of selling new connection ($22 per connection)3. Technology cost is high. 4. Biggest expenditures is network maintenance and its expansion. 5. Can not cover entire Pakistan due to its high cost and law return on investment.

Opportunities

1. Third Generation (3g) technology will be introduced.2. Services like video call and y-max will be brought for the consumers.3. Operations of BCGs will be maid cost effective.


58

Threats

1. High taxes imposed by the government on the services provided by the company.

2. Fast reiterating economic conditions of the country.3. Decreasing buying power of consumers.4. Price wore initiated by other companies.

Conclusion

Telecom sector is growing at an outstanding pace where all

Stakeholders are getting due benefit out of it. PTA is fully abreast of the rapidly

developing technological advancements at the global telecom scene. The aim of

the Pakistani regulator is to foresee and be proactive in providing conductive

environment for the operators in order to facilitate them and introduce state of the

art telecom facilities in the country. Telecom sector is contributing about 2% in

GDP directly and if we include its indirect contribution in other sectors this share

comes to about 5%. It is expected that fixed as well as wireless sectors will grow

considerably in next future years.

Broadband in the last mile, Value added products and content development are

rather barely explored markets and offer a great deal to an aggressive investor.

3G services in major cities would take a slow start but will catch on fairly well and

will be a major contributor in satisfying consumer’s needs provided these are

offered at affordable cost with easy access, availability, reliability and with

abundant content.


swot analysis of telecom sector

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