telecom cellular sector

8/14/2019 Telecom Cellular Sector

http://slidepdf.com/reader/full/telecom-cellular-sector 1/32

Telecom Cellular Sector

In the name of Allah, Most Beneficent, Most Merciful

RESEARCH REPORT

Of

On

Telecom cellular Sector of

Pakistan

Submitted to

Mrs. Nosheen Sarwat

Submitted by

M. Zuhair Altaf MBC-08-36

Omer Hanif MBC-08-16

Ramiz ur Rehman MBC-08-31

Usman Arshad MBC-08-32

Usman Aslam MBC-08-46

Aun Ali Khosa MBC-08-54

1




Getting practical knowledge is one of the majoraims of MBA program. Institute of Management Sciences,Bahauddin Zakariya University, Multan has followed policy of

assigning different practical assignments to its students so atouch of real working environment can be given to thestudents apart from classroom studies at widen theirperspective.

Economic Environment of Business is one of thecore subjects of MBA (1), which gives an insight into thetheoretical concepts and their application in practical world.Therefore study of the subject is imperfect without observingin real working environment.

In this context, respectable, instructor Mrs.Nosheen Sarwat has assigned us to study the ecomomic andsocial impacts of Telecom Cellular on Pakistan.

2




We have the only pearl of our eyes to admire theblessing of the compassionate and omnipotent because thewords are bound, knowledge is limited and time is short toexpress his dignity. All thanks are due only to Almighty

ALLAH, most gracious, the most merciful, who gave us thestrength and we did this job. Our special praises are forHoly Prophet Muhammad (SAW) who is, for even

humanity as a whole.

It is a matter of great honor and pleasure for us toexpress our ineffable gratitude and profound indebtedness toour venerable supervisor Mrs. Nosheen Sarwat for herkind supervision, valuable suggestions and sympatheticattitude throughout our research. We are much impressed of her intellectual activities, inexhaustible energy to steer forththe student. Her sympathetic and sincerest attitude is highly

qualified experience.This research report includes economic and social

analysis of telecom cellular sector of Pakistan. SpecialThanks to all of our friends and all those who have helped usin collecting the data.

3




TABLE OF CONTENTS

• History of Telecom cellular sector

• Cellular Companies

• Economies of telecom cellular sectoro Revenue

o Subscribers’ growth and penetrations

o Regional Comparison

o Market share

o Coverage

o Financials

o Average revenue user

o Investment

o Taxes on cellular sector

o Imports

• Related Industries

o The state of Pakistan hand set market- an analysis

o Mobile Phone Repair Industry of Pakistan

• Recent Social Impacts

o Telecom and technology mega trends for Pakistano Late night calling packages and Pakistani youth

o Which one is best post paid or pre paid?

o Cell phone users in Pakistan prefer style over features

o Mobile web and mobile advertising in Pakistan

o An Insight into the Mind of Mobile Phone users

4




o Top Reasons for Selecting a Mobile Provider

• Group Discussion

• Bibliography

History of Telecom cellular sector

Since the inception of Pakistan, basic telecom services were being provided by amonopolist, previously called as Telephone and Telegraph department (T&T).The department was being run by the government and played multiple roles asregulator, policy maker, operator and service provider in the country. The T& Tdepartment was later converted into a corporation. Although the corporation wasearning huge profits from the services, it was re-investing the same profits intothe sector for the provision of more telecom service but the investment was notenough. Further, with the technological advancement, more and more telecomservices were becoming available but there was not enough money availablewith the corporation to install new telecom systems for the provision of modernservices. Resultantly, a digital divide prevailed in Pakistan keeping it behind itsneighbors and other comparable countries in terms of telecom access.

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

Pakistan Telecommunication Company Ltd has emerged as a successful Forbes2000 conglomerate with over $1 billion in sales in 2005. In addition, there areover 60 million landlines in the country. As a result, Pakistan won the prestigiousGovernment Leadership award of GSM Association in 2006. By March 2009,Pakistan had 91 million mobile subscribers out of 161 million population possessmobile phones - 25 million more subscribers than reported in the same period2008.

According to the PC World, a total of 6.37 billion text messages were sentthrough messaging systems across Asia Pacific over the 2008/2009 Christmasand New Year period. Pakistan was amongst the top five ranker with one of thehighest SMS traffic with 763 million messages.

Although tremendous growth has taken place in the Pakistan telecom sector butmost of it can be attributed to the cellular growth. Fixed line is still awaiting a takeoff. Similarly Value Added Services have grown but are still a drop in the bucket.Now that the competition has been introduced in the telecom cellular sector some very positive impact have been observed on the growth of the sector in a

5

http://telecompk.net/2007/06/26/top-reasons-for-selecting-a-mobile-provider-in-pakistan/





short span of time which is expected to continue to grow for at least next fiveyears.

Cellular Companies

Mobilink

In Pakistan, the Pakistan Mobile communications Ltd(“Mobilink”) started its operations in 1994 and, until early 2001, had a marketshare of 40%. In April 2001, OTH took over management control of the company.As the market leader, Mobilink serves more than 31.5 million subscribers,representing a market share of 38.5% (as of March 2008).

Mobilink GSM (PMCL), a subsidiary of Orascom Telecom, started its operationsin 1994, and has become the market leader both in terms of growth as well ashaving the largest customer subscriber base in Pakistan - a base of over 28million and growing. We pride ourselves on being the first cellular serviceprovider to operate on a 100% digital GSM technology in Pakistan that alsoprovides state-of-the-art communication solutions to its customers.

Mobilink offers exclusively designed tariff plans that cater to the communicationneeds of a diverse group of people, from individuals to businessmen to corporateand multinationals. To achieve this objective, it offers both postpaid (Indigo) andprepaid (JAZZ) solutions to its customers. Compared to its competitors, both the

postpaid (Indigo) and prepaid (JAZZ) brands are the largest brands of their kindin the Pakistan cellular industry.

In addition to providing advanced voice communication services that makes thelives of millions that much easy, they also offer a host of value-added-services totheir customers. At the same time, Mobilink places high importance to itscoverage, which is why they cover in 10,000+ cities and towns nationwide as wellas over 130 countries on international roaming service.

Ufone

The company commenced its operations under the brand name of Ufone fromIslamabad on January 29 2001. During the year, as a consequence of PTCL’sprivatization, its shares were acquired by Emirates TelecommunicationCorporation (Etisalat). Being part of PTCL, the management of Ufone has alsobeen handed over to Etisalat. During the years, Ufone continued on the path tosuccess.

6




The Company further expanded its coverage and has added new cities andhighways. Ufone has network coverage in more than 5885 locations and acrossall major highways of the country. Ufone expanded its coverage and has addednew cities and highways to its coverage network. As mobile users in the countryhave been growing at a very rapid pace, Ufone has maintained itself as the 3rd

largest cellular operator in Pakistan with a market share of nearly 21%.

Warid

Warid is a Pakistani telecommunication company based inLahore, Pakistan. Warid Telecom is a joint venture between Abu Dhabi Group &SingTel Group. Abu Dhabi Group entered into a strategic alliance with SingaporeTelecom. Subsequent to this transaction in July 2007, telecom giant SingTelacquired 30% percent equity stake in Warid Telecom, Pakistan, for US$758million. This partnership is part of a strategy to support Warid Telecom’s

continued growth and to enhance its market position.

Warid Pakistan provides both post-paid and pre-paid connection plans. The post-paid plan is branded and marketed across the country under the name Zahi Post-paid, which means leader or royalty. The pre-paid segment is branded andmarketed as Zem Pre-Paid. It is ranked as the fourth largest operator in Pakistan.Warid Pakistan claims it has the largest "post-paid" subscriber base in Pakistan.

TelenorTelenor Pakistan is a Pakistani GSM cellular serviceprovider, and is a subsidiary of Telenor, Norway. Telenor Pakistan is 100% ownedby Telenor ASA and adds on to its operations in Asia together with Thailand,Malaysia and Bangladesh.

Telenor Pakistan launched its operations in March 2005 as the single largestdirect European investment in Pakistan, setting precedence for further foreigninvestments in the telecom sector. The company has crossed many milestonesand grown in a number of directions, making Telenor Pakistan a leading telecom

operator of the country.

Telenor covers a total of coverage area in more than 3000 cities, towns andhighways throughout Pakistan, making it the 2nd largest GSM service provider inPakistan with a share of 21%.

Telenor is the fastest growing mobile network in the country, with coveragereaching deep into many of the remotest areas of Pakistan. Telenor is keeping

7

http://en.wikipedia.org/wiki/Mobile_phone

http://en.wikipedia.org/wiki/Mobile_phone




ahead by investing heavily in infrastructure expansion. With USD2 billion alreadyinvested, Telenor have extended agreements with our vendors for networkexpansion and services until 2009. The agreements, with a potential to result inUSD750 million worth of orders from Telenor Pakistan, are some of the biggest of their kind in the industry.

CM Pak (Zong)

China Mobile is the world's largest telecom operator. Havinga customer base of over 300 million customers, its network routes 700 milliontext messages every day and handles 250 million calls every hour.

China Mobile is perhaps the only cellular network that provides uninterrupted,reliable coverage through tunnels, on highways, inside sky scrapper elevators as

well on top of Mount Everest.

ZONG is the first International brand of China Mobile being launched in Pakistan.The company is often cited as CM Pak (Zong). CMPak has invested more thanUS$ 700 million in the telecom sector in Pakistan and an additional US$ 800million will be invested till the end of year 2008. It is fifth largest company but withfastest growth in 2008.

Instaphone

Instaphone is the pioneer of cellular industry in Pakistan. Initially the companywas owned by Millicom International; later on Arfeen Group acquired it. Thecompany under the renewed license is planning to role out a countrywide CDMA mobile network and would be the only CDMA mobile operator in Pakistan tolaunch first 3G services in Pakistan. It is ranked at sixth number in terms of market share.

Economics of telecom cellular sector

Pakistan's service sector accounts for about 53.3% of GDP. Services sector of Pakistan’s economy, telecom being part of it, is the largest contributor inthe composition of GDP and in 2007-08, its contribution to the real GDP of the country was reported at 73% compared to 58% in 2006-07. Telecom cellular sector is an engine to Pakistan Telecom sector and 70% of GDP Contribution of Telecom sector to services comes from cellular sector.

8

http://en.wikipedia.org/wiki/CDMA

http://en.wikipedia.org/wiki/3G

http://en.wikipedia.org/wiki/Service_Sector

http://en.wikipedia.org/wiki/CDMA

http://en.wikipedia.org/wiki/3G

http://en.wikipedia.org/wiki/Service_Sector




Telecom Revenues

Telecom revenues growth remained slow in 2007-08. During the year, telecomgrew by 18% and reached 278.5 billion while this growth was reported 21% in2006-07. Cellular sector has increased from 56% in 2006-07 to 65% in 2008.

Fixed line sector has shown negative growth in revenues. Cellular Mobilerevenues increased by 37% in 2007-08 and reached RS. 182billion.

Subscribers Growth and Penetration

Cellular Mobilesector has shownan impressive

growth over theyears. Pakistanhas been one of the fastestgrowing mobilemarkets amongthe emergingtelecom markets.Subscription of subscribersremained

impressive for another year andall 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 in2006-07. Mobilink comes second with the addition of 5.7 million subscribersduring the same period. Warid telecom succeeded to add another 4.8 millionsubscribers this year. Ufone added 4.0 million subscribers in 2007-08 ascompared to its addition of 6.5 million in previous year. CMPak (Zong) enteredthe cellular market with aggressive marketing and infrastructure roll out. Itsgrowth was negative previous year but in 2008 it has 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. In August, it was at itspeak of about 55.6%.

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

9




years. Generally, the growth of subscribers has declined considerably in 2007-08, which is evident in table. Total subscribers growth has been reported 40% in2007-08, which has declined from 82% in the year 2006-07. Growth of cellular subscribers has declined by all major companies. Mobilink growth declined from53% to 22% while Telenor growth has declined from 199% in 2006-07 to 69% in

2007-08. CMPak (Zong) has entered the market recently and has shown positivegrowth.

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 toSindh. Total subscribers in Punjab at the end of June 2008 reached 52 millioncompared to 37 million in 2006-07. Growth of cellular subscribers remainedhighest in the province of Balochistan where subscription grew by 57% in 2007-08 with total cellular subscribers approaching 2.2 million compared to 1.4 millionin 2006-07. When compared with 2006-07 and 2007- 08, Cellular Mobilepenetration has increased by 36.8 percentage points in Punjab and its totalteledensity climbed to 58.0% at the end of 2007- 08, which was 42.4% in 2006-07. A significant improvement in Balochistan has been noted where its cellular Mobile teledensity ha 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 andGovernment of Pakistan for this province in telecom sector in last year.

Regional comparison

10




Growth of cellular mobile sector in Pakistan has placed Pakistan amongemerging East Asian economies like Malaysia and Singapore. Cellular Mobilepenetration of Pakistansurpassed all its SouthAsian counterparts. Pakistan

Cellular Mobile penetrationin 2007-08 was over 54.7%which is 34.4percentage points higher than India and 31percentage higher thanBangladesh.

This tremendous growth isattributed to many internal and external factors starting from deregulation downto implementation of Mobile Number Portability. The Government and Regulator

are facilitating the sector and making every effort to provide mobile access toevery corner of the country. Today almost 91% of population of Pakistan iscovered with mobile, fixed and WLL networks. All operators are expending their networks to number of cities/towns/villages. By 2007-08 more than 9,369 cities/towns and villages have mobile networks coverage by one or all operators.

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 moreshare in the market. During the year 2007- 08, Telenor has emerged as fastestgrowing operator who has improved its market share from 17% in 2006-07 toabove 21% slightly higher than Ufone who also has 21% market share. On theother hand, the leading mobile operator, Mobilink is loosing its Significant Marker Power place rapidly and its share has declined by about 5 percentage points and

11




reached 36% in 2007-08 compare to 41% in 2006-07. CMPak (Zong) is alsogrowing very fast and it has added 2.9 million subscribers, which is an impressivenumber and one could hoped that in future it will grab more market share. CMPak has added more subscribers in last few months and it has continued itsaggressive media campaign along with infrastructure rollout which helping it to

grab more market share in short span of time.

Coverage

Low AverageRevenue Per User (ARPU) and toughcompetition incellular mobilemarket of

Pakistancompelled all operators to expand the network rapidly so that they can add moresubscribers on their network to improve their revenue. Currently more than 91%of the population has access to cellular mobile service all across Pakistan thoughthe access is more in thickly populated localities. Some areas of Balochitsan andNWFP remained uncovered due to disturbances in those areas; rest of thecountry is almost covered by now. To expand the infrastructure, operators arerapidly 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 figurebecause it takes hugeinvestments to install the cellsites. Ufone has added thehighest number of cell sites in2007-08 and that addition was1,827 new cell sites during2007-08. With addition of these,Ufone total cell sites havereached to 3,471. Next wasMobilink who added 1,817 cellsites, its total sites stand at7,339 which is the highestamong all. Total Cell sites inPakistan reached 21,518 whichwere only 13, 752 in 2006-07.In terms cell sites growth, Ufonegrowth was 111% while CM Pak growth remained 100%.

Despite aggressive cellular subscriber growth, franchises increased normally at3%. During the year 2007-08, total cellular operators franchises increased to1,679 which were 1,619 the pervious year. One reason for this slow growth could

12




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 reasoncould be that expansion is going on unpopulated areas where the operatorsalready allotted franchises.

Financials

Financial health of the cellular mobile industry seems to be volatile and most of the operators are operating in loss though their revenues have increasedsignificantly over the last few years. The only operator, Ufone has reported profitof Rs. 1.3 billion in 2006-07 who is not dependent on off shore loans and rapidinfrastructure roll out. Most of the operators are engaged in rolling outinfrastructure 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 loansfrom off shore sources have to bear loss due depreciation of currency.Depreciation of local currency has increased the cost of doing businessconsiderably. Moreover, low tariffs and increased tax rates could also beresponsible factors for low profit margins in the industry. However, the revenuegrowth seems quite comfortable of all operators though it lower as compared toprevious years. In the year 2007-08, revenue grew by 35% compare to 48% lastyear. Among the operators, Telenor is the most efficient operator in terms of revenue generation who has increased about 97% revenue in 2007-08 comparedto previous year and reported Rs. 45 billion revenues in the fiscal year 2007-08.Mobilink earned about Rs. 80 billion revenues, which is 24%.

Average Revenue per User

Average Revenue per User (ARPU) isan important tool to measure thefinancial health of any telecom sector.The emerging markets of cellular mobile segments in South Asia areconsidered the low ARPU markets. InPakistan ARPU has declinedsignificantly over the years. In the year

2003-04, ARPU in Pakistan was US$ 9which has declined to only US$ 3.1 in2007-08. However, the cellular mobileoperators in Pakistan succeeded tomaintain ARPU in 2007-08 at the levelof previous year and reported only 3%further decline. ARPU for Instaphone phone declined by 57. CMPak (Zong)’sARPU has declined by 52% in 2007-08 which is due to its large expansion and

13




low level of subscribers. Mobilink's ARPU declined to US$ 3.5 compare to to US$3.8 in the year 2006-07. Similarly, the Telenor's ARPU declined by only 3% andreached to US$ 3.9 compare to its US$ 4 in 2006-07.

Investment

In this competitivemarket, operators arebound to increase theinvestment to getmore share of subscribers. In last 5years, cellular mobileoperators haveinvested over US$8.4 billion in Pakistan

which has createdlarge 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.One reason for this decline could be that operators have already covered theurban areas and are not investing to as much in the rural areas, which are lesslucrative from business point of view. Moreover, substantial taxes could beanother reason to stop investors from further expansion. During the year 2007-08, Mobilink invested over US$ 919 million while Telenor invested over US$ 565million. CMPak (Zong) is another operator who started expanding lately andinvested 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 MobileIn the current budget, government has increased the rate of GST on telecomsector significantly and analysts are of the view that it may have an advanceimpact on telecom usage and resultantly, the GST collection may dropconsiderably from the sector. So far, the Government revenue from telecomsector in terms of taxes is increasing continuously since 2004-05 after theliberalization of the sector. During the year 2007-08 mobile segments contributedmore than Rs. 79 billion to national exchequer in the form of taxes, which is 25%higher than the last year. Cellular Mobile sector contributes more than 80%telecom tax collection. This Tax collection continued to rise over the years andwas recorded at Rs. 44.6 billion in 2007-08. In terms of GST sector hascontributed about Rs. 37 billion, which is 30% more than of the last year.However, the growth of the GST collection from cellular mobile sector hasdeclined 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 10million SIMs and increased rates of GST. However, the complete impact of

14




increased GST will becaptured in next yearsbecause the rate has beenincreased at the end of year.Activation tax is charged @

Rs. 500/- per newconnection and it has beenthe major demand of theindustry to remove this taxbecause operators areunable to pass on this tax toconsumers due tocompetition in the market. Activation tax collection has increased from Rs. 17.57billion in 2006-07 to Rs. 19.18 billion in 2007-08 which is 11% higher than theprevious 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 subscriptionis 21%. Ufone share in activation tax was reported 16% while it has market sharein total subscribers is similar to that of Telenor. It indicates that Ufone addition islower 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 companiesdeposited over Rs. 23.2 billion, which is 33% higher than the last year. Mobilinkhas deposited over Rs. 10.1 billion in this head, which is 44% of total WHTdeposited to FBR in 2007-08. Telenor's share in total WHT was 25% whodeposited over Rs. 5.8 billion during 2007-08.

Imports

Imports for telecom sector in 2007-08 havedeclinedmarginally andstood atUS$1.33 billion,

which are 4% of the total imports.Imports of cellular Mobilehandsetsreduced significantly by about 33% during the year 2007-08, which indicatessaturation of the market while imports of the telecom equipment has increased by31% in the same period. To discourage imports of cellular mobile handsets the

15




government has imposed a duty of RS. 500 per mobile hand set in the budget of 2007-08. The competitive environment has compelled all operators to importmachinery and equipment to expand their infrastructure.

Related Industries

The State of Pakistan’s Handset Market – An AnalysisHandset market has played the most pivotal role in the overall growth of Pakistan’s telecom industry. The 2008 was a difficult period for telecom industryin general with plenty of political uncertainty, negative economic indicators, ever rising inflation & unfavorable budget policies played their role in restraining thegrowth pattern of previous years.

The hardest hit area in this declining growth pattern has been the handset marketof Pakistan. Till Dec, 2007, the growth of handset market was excellent witharound 1 Million handsets were being sold on monthly basis. However in 2008the figures came down to 600 K units per month.

Handset Market - Current ScenarioPakistan’s handset market is primarily a low-end market with majority of volumecomes from low-end mobile phones. Another important aspect is that our handset

market is extremely price sensitive just like any other handset market of adeveloping country.

16




To comprehend the local market dynamics, below is the price segmentation

analysis along with the market share each price segment comprised upon.

If we look at the figure of how the current market stands with respect to marketshare of each handset manufacturer, Nokia still has a sizeable lead though their market share has been deteriorating steadily (from 65% in 2006 to 48% at theend of July, 08). The progress of Samsung has been phenomenal from 8%market share in 2006 to the current 30% with indication of further progression in2009. LG is the second biggest gainer (approx 17% share for a player who has

just been active since 2 years) with most of the success came from its 2successful models LG KG195 & KG270. Sony Ericsson & Motorola represent 2of the biggest loosers in the handset market with only 5% & 1% share in the total

pie.

Since in Pakistan most still think Sony Ericsson is the second major player in thePakistan’s handset market which isn’t correct any more. Pakistan is primarily alow end market with approx 63%-65% volume generates from phones worth lessthan 3k and in Sony Ericsson local product portfolio there is not even a single SEmodel in this price range, strangely enough their majority of portfolio compete ina price segment (High-end) which is just a mere 5% of the total handset market.

Motorola is just vanishing in Pakistan, the disaster of their F-3 model started avicious slide from which they never recovered with the future seems more bleak.

The Koreans are playing their cards really well with the success of both Samsung& LG they are really flying high. Especially the success of Samsung is veryimpressive with a very strong portfolio (the most balance portfolio in the industrycovering all price segments with good products). This success in Pakistan hascome down from the global success Samsung Mobile has been enjoying from thestart of 2007. Their flagship model SGH C-160 targeting the low-end category ismaking waves in the most lucrative (volume vise) price segment in Pakistan’s

17

http://telecompk.net/wp-content/uploads/2008/08/hs-market-share08.jpg




handset market. With more emphasis on R&D & product development the futurelooks bright for this giant conglomerate.

LG has also succeeded really well through getting direct benefit from theabsence of any substantial products by SE. But the question mark on the product

quality is hurting the brand to grow exponentially.

Nokia, the global leader in the world is still the player to beat in Pakistan’shandset market with the resounding success of Nokia 1200 & 1208; this globalgiant has so much to offer in-terms of quality products. In Pakistan, Nokia plays amajor role in 3 main price categories (Low-end, Low Mid & High) whichcomprised upon 82% of the total market.

Mobile Phone Repair Industry of Pakistan

The huge influx of imported mobile phones in Pakistan has spawned a wholeindustry around mobile phone repair work. The trend of mobile repair as a smallbusiness in Pakistan has taken off rapidly in the last few years. One reason for this could be the increase in handset prices caused by higher duty on handsetsand falling value of Rupee. Most of these “repair technicians” lack formal training

and have most likely picked up mobile repairing skills on the job.

The small mobile repair shops have opened up everywhere. In Lahore, marketslike Hafeez centre and Hall road are among the most popular for mobile repair work. There are signs outside these shops which claim that they can repair andunlock phones from anywhere in the world. These shops charge around 300 to

18




500 Rs to unlock a phone, depending on the model and difficulty involved. Theseshops are equipped with tools, hardware and Internet access.. On the high-end,mobile phone retail networks like MobileZone have their own technical facilities toservice their customers and the phones under warranty.

In May 2008, Nokia started NOKIA CARE centers in Pakistan, located in Lahoreand Karachi. Nokia’s official outlet provides services like warranty claims andmobile repair. This specific service is the only one by a global retail brand inPakistan (at the moment), providing their customers with top notch repair lab,complete with quality control standards and good customer services. But apartfrom Nokia, markets are loaded with other brands such as Motorola, Samsung,Sony Ericsson, Blackberry etc for which there are no such quality repair facilities.

The perception of general public is that once mobile gets into a repair shop itsvalue decreases instantly. Usually 80% of the second hand mobile phones arerepaired because of technical issues and then sold again in the market. Above

all, it is clear that the quality in repairing these hand sets is below standard. Thetools employed are usually not specifically designed to do that work. The physicalenvironment of the repair unit is open with dust and pollution.

Recent Social Impacts

Telecom And Technology Mega trends For Pakistan

Twelve recent, noticeable telecom and technology trends from Pakistan.

Popular : iPhone 3G, Book your number by Zong, Mobile Internetwith USB modems

Success Stories: Zong brand launch, Telenor strategy

Survivors: Ptcl, Warid

On the defensive: Mobilink

Wrong Turns: Tax increase on telecom, charging for customer service call

Defying the odds: Entrepreneurship continues to thrive and inspire

Becoming mainstream: Social networking

Getting noticed: bloggers and Internet users by Google

Shift in business model: User generated content threatens traditionalmedia

Challenges: economy, energy & power shortage, political instability

On track: WiMAX with second commercial rollout

Policy issues: Enforcement of new SIM registration policy, when to rollout3G

Late Night Calling Packages and Pakistani Youth

19




These days there is a rush of packages out in the market from the mobile serviceproviders, targeting different market segments and offering all kinds of discountsdepending on who you call or when you call.

Off-peak timings have always been used by service providers to create interest

and to lure customers. There was a time not too long ago when the Internetaccess used to be free at night. Nowadays the mobile service providers aretrying to shift customers from PC to mobile phones usage. This is true for voice,data and even Internet. There has been a subsequent change in the Internet anddata usage via mobile phones since the GPRS rates have gone down, for example you can send hundreds of text messages per day to any network in thecountry.

The bigger trend is on the heavily discounted late night time calling packages,

which are in effect usually from 11pm at night to 7am in the morning. In thesehours a single call costs you a total of 3 to 6 rupees an hour. All big names of thetelecom sector are competing with each other. Some examples include Warid(infinite craze, zem nites), Mobilink (Raat Shuru Baat Shuru), Djuice (jaagtayraho package), Zong and Ufone.

The most controversial idea behind these packages is the timing: from 11pm inthe night till 7am in the morning. These packages are purely targeting theyounger generation. A large percent of the people think these kind of activitiesare hurting our youth and blame the telecom companies for this trend.

The times are gone when parents used to keep a close watch over their childrenand monitor their every single activity. Now a days the youth is much mature andhave more exposure and more understanding of things. The parents perceivethings quite differently from the youth though and the negative or positive aspectsare seen differently. The responsibility falls over to children of how better theyunderstand the life around them. Certain priorities must be set according to theage and these priorities should never be compromised. It’s not a disastrousmarketing strategy or a false move by the telecom companies, its just how wethink about it. Staying up at nights and fight through long working days willdefinitely affect your health, education and professional life. Staying up nightswhen the days are free makes sense. So its all about prioritizing your goals in acertain way so that not your sleep or professional life is disturbed.

Cell phones nowadays have become symbol of independence – for our youththat mobile phone helps them to develop their own language and social groupsaway from the prying eyes of their parents. It has become Status Symbol or whatpeople say Fashion statement - It is a way that people wear their phone in astyle, color, cost and features and feel that a phone can enhance their looks.Although mobile phones have long been a part of the business community, they

20




are quietly becoming entrenched in personal lives. Cell phones play a crucial rolein relationships among a group of young people, Mobile phones also influencethe trend toward relaxing the traditional amount of contact permitted beforemarriage. Cell phone is also in the use of people who are working 24/7environment and always remain on the go.

It is privacy and not mobility that matters. Most youth have cell phoneconversations in their bedroom. Lets have a look on few needs of new breed(Youth) that have been forcing them to get addicted to this cell phone nightpackages, the need to make their identity and to build “social and emotional ties”.The shrinking size of present day families explain why the youth today feel theneed to communicate with virtual brothers and sisters.

Youngsters have been using cell phones to form friendships and social groupsaway from their families, feeling that these phones give them privacy that theywould not otherwise have. As cell phone use becomes even more widespread,

communication between parents and their kids may become even moreimpersonal.

The saying “romance is in the air” appears to be true. In today’s world, it ismobile phones which are carrying the messages of love. Youngsters are usingmobile phones to maintain personal and romantic relationships.

Grabbing our new generation, these free night packages services provided byCellular Companies have become a great pleasure/encouragement to people likewho aren’t responsible at all, it seems they are announced to spoil the future of our youth, just give it a thought which kind a people avail these services and

what they do? Whole night they spent in useless, ungraceful conversation it’s allbeyond morals.

The immature generation has become addicted to avail these kind a packages.These kind portable platform providers are taking away our youth from family/Cultural/ Traditional/ Religious values, they don’t even care about their healththough they know how these RF radiation would be harmful as for as continuoususe is concerned.

The Cellular Companies should make some standards so they can provide suchservices which can be of use to make the youths future bright and should

consider the social impact before announcing any such service, they should offer some M-Learning (Mobile Learning) services they are behind the race of announcing free night packages, low rates for one special number.

No doubt most of the parents are equally responsible for this attitude in our newgeneration, in previous era what kind of environment we have had at homes —-sitting together in TV-Lounges , One time/place to sit and eat together nofriends/outings in late night, but this fast life where people are to avail luxurious

21




lifestyle parents themselves arrange separate rooms equipped with individual TV,personal Computer with high speed Internet connection and a latest model of anyfamous brand of Mobile handset though its of no use to them at around certainage , yup parents are equally responsible they should be responsible they shouldkeep eye on their children’s activities, what kind a friends they are making how

they are progressing academically how they are spending time.

The generation gap between parents and children’s is not the main issuebecause its more than the gap, its about basics of raising good children. Truethat bad habits or friendships existed before this direct and private source of communication too but its all starts right from your basic education that our youthis getting at Home. So the message goes to parents: make your kids to availgood morals and talk to them on every matter to give them better understandingsof what is right and what is wrong.

Which one Is Best For You: Postpay Or Prepaid?

According to different market surveys and analysis of the customer preferences,prepaid and postpaid are perceived to be very different. Cost is the main factor.Students for example would not go postpaid because of their limited budget.Apart from that, postpaid packages have always been status symbols in the eyeof customers. It is common knowledge that prepaid users are being catered with

juicy rates and over night packages where you can call for as low as 4 to 5rupees an hour. Post paid packages are still not as competitive and attractive ascompared with prepaid. So how do people choose between prepaid andpostpaid?

It remains a fact that demographics (age, gender, income, disabilities, mobility,educational attainment, employment status, and even location) play an importantrole in choosing prepaid and post paid packages. But look carefully and there aresome big differences which go beyond cost and status.

Some post paid packages such as Warid Telecom provide a good deal and arewithin reach of common public. The package line rent amount is same as the freeminutes cost every month. For example a Zahi package with a line rent of 150gives you 150 free minutes. The zoom packages are also availiable on Zahi.There are five Friends & Family (FNF) number selections who you can call for 24/7 at 0.82 rupees a minute. But calls on other mobile networks and landline

numbers can cost 5-6 rupees/min. Recently Zahi has launched the card billingsystem, through this you can charge your postpaid balance from the zem prepaidcard. This makes the billing quiet easier for the postpaid customers. Other thanWarid telecom, Mobilink, Ufone, and Persona post paid (Telenor’s postpaid) haveless recognition and market share. But in prepaid Ufone, Telenor and djuice havemade their mark. Mobilink is expensive for both post paid and prepaid but it hasfirst-move advantage and subscribers who don’t want to experiment with mobile

22




number portability stick with it. Zong- the china mobile company is just prepaid asyet. Perhaps they have calculated that its not worth going for postpaid segment.

There are actually some disadvantages of going with postpaid, these include:

a) Bill payment is not as easy for postpaid as prepaid (again, it varies by themobile operator and area).

b) International calls are not as easy to make on postpaid as on prepaid. For example Warid demands a security (Rs. 4000) for enabling international calls.Get a prepaid line and call as long as you have balance.

c) Service gets disconnected when 90% credit limit is reached and it takes quitean effort to get the service replaced. Time varies by operator and horriblecustomer service stories are common. This was discussed at Telecom GridPakistan forum.

Cell Phone Users in Pakistan Prefer Style Over Features

Report from The Nation. A latest study conducted by Nokia pointed out that thepeople in Pakistan prefer style more than the need of being connected. Thestudy says that the new devices combined with a attractive fold design with quickcover keys is bringing out substance to style, which is more acceptable inPakistan as compared to other markets in the region of Asia and Asia Pacific.The study said that for innovation-conscious users ‘we need to offer intelligent

and entertaining multimedia functionality in an easy to use, ultra slim package’.Users in Pakistan had surpassed others in the demand for innovation intechnology.

The cell phone users in Pakistan were involved more in style, which was beyondtheir expectations. The users in Pakistan needed style and design more thanother features.

23




Nokia was considering of doubling its investment in Pakistan looking at theresponse. Youngsters demanded innovation in multimedia computer that bringsthe complete experience to a sleeker body. Nokia has created a very eye-catching device using premium materials to enclose world-class features andexperiences.

Nokia had introduced a trimmer fold model to its Nokia N-series line up, a newmultimedia computer that brings the complete experience to a sleeker body, withlittle compromise.

Rise In Popularity Of Mobile Web And Mobile Advertising

In Pakistan

The analytics data from mKhoj, a mobile advertising company, shows that thenumber of impressions (views of advertisement) from Pakistan took an 80% jump

in September and in the previous month, the impressions showed 300% growth.Pakistanis have always been big time fans of mobile games, ring tones and other fun downloads, a trend consistent with the mobile users worldwide. Now thepublic is moving from WAP suites to surfing the web and portals on mobiles. Theunlimited data plans and EDGE service are contributors to this trend.

As long as the marketers follow an ethics guideline and provide relevant ads, themobile advertising will take off and become mainstream.

Here is a summary of the trends which point to growth of mobile advertising:

89 million user base

Near 100,000 mobile data users (estimate)

Good EDGE services (in terms of options and coverage) by mobileoperators

More wireless broadband services - such as Zong USB Internet

Growth of smart phones as a percentage of overall handsets

Preference to browse web on the phone

Acceptance of mobile ads - as shown by ad impressions

Emergence of local mobile ad players such as mKhoj

Pakistan’s traffic for AdMob (a company for mobile advertising) ranks number 18

in the world. Given the limited number of mobile data users in Pakistan. InSeptember 2008 the requests recorded from Pakistan were 28.9 millions, up 3.5times from September of 2007. Note that this is data is only from one ad provider and the actual number is likely to be higher. However this is a very good indicator of mobile web trend in Pakistan and shows that the mobile web usage inPakistan has taken off.

24




An Insight into the Mind of Mobile Phone users - The

battle of Needs & Aspirations!

The mindset of our local mobile phone user is very unique & complex. Influences

of socio-economic & demographic factors, peer pressures & life style etc are themain driving force through which the consumer ends up owning a particular model for his/her communication needs.

“A professional looking guy is standing nearby you, he is pretty calm & collectedbut needlessly try to show of his latest PDA, few seconds forward than he pullsout his phone stylus & tap here & there on the screen than put the phone in hispocket while giving a good gaze to all the near by guys boasting a smirkingproudly smile“.

To further explore this mindset, let’s look closely, the phenomenal growth inmobile penetration have created a very unique socio cultural psyche. Justimagine from a 12 year old kiddy to a 60 year old man are all playing with thesmall communication device known as mobile phone. A rough estimate suggeststhat in Pakistan the usage span of a new cell phone is mere 3 months (meansmajority of local users upgrade their cell phone within 3 months time).

Pakistan’s mobile user into 2 main categories (2 basic types of users) havesummed up as follows

1. Those who are driven by their needs (read 3 core phone functionalities)

2. Those who are driven by their aspirations (Users who can easily sufficetheir communication requirement through a say Rs. 10k mobile phone butinstead they choose to carry a cell phones worth Rs. 40K or more)

25




In every mobile phone user’s mind there is a battle going around, a battlebetween their needs & aspirations. Some own phones to suffice their communication needs while some own phones to meet their aspirational urges.

Now look at the mobile phone user preference chart while making actualdecision, the data is a study & I have used extrapolation for analysis purposes asit enable us to understand the psyche of local consumer. Also take a look at thechart depicting local consumer purchasing pattern.

26




Many professionals/ executives have come across who take their hands on anynew business phone which hits the market, to few of them even the question wasasked that why you are carrying a blackberry/ PDA or a latest Nokia E-seriesphone…. the only answer I got in reply was we need to check our emails 24/7 &that’s about it (surprisingly no words about PIM, one of the major feature of any

business phone since majority of them doesn’t exactly know what this PersonalInformation Management really stand for). Majority of them have cell phoneswhich can be met in exact requirement in half of the price they want to spend.

The main reason lies in the consumer mindset (the aspirational value attached tocarrying a business phone) since the consumer tend to believe that how he/ shewill look professional (top executives) if they are not carrying a BlackBerry or aPDA phone.

And this is not just a local phenomenon; even mobile users of developedcountries tend to be manipulated by their desires & aspiration rather looking to

their actual communication needs. Hence this battle between needs & aspirationwill continue.

Top Reasons for Selecting a Mobile Provider in Pakistan

In interesting study (based on a sample size of 1812, ages 18-60, lower incomegroups) from LIRNEAsia mobile phone users were asked the main reasons for selecting their primary mobile company. The study clearly shows that coverage is

more important in rural areas, tariff is less important . Here’s the comparison of urbanand rural trends.

27






Group Discussion

Business in Pakistan revolves around Cellular companies, print media andelectronic media. 50 % space on newspaper is occupied by ads from different

28




cellular companies and after every five minutes you are to watch ads of samecellular companies on electronic media.

In Pakistan cellular industry has shown rapid growth, especially in last few years.As per PTA stats, there are 91 million mobile users in the country, which wereonly couple of millions some years ago.

Every company is trying to beat its competitor and efforts are clearly seen to beateach other in this corporate battle. Where these cellular companies brought tonsof investment into country, and played constructive role in bettering lifestyles, atsame time this battle between cellular companies has actively spoiled our youth.Every single boy and girl has a mobile phone and they are found texting andtalking on their cell phone all the times.

Night Packages:

These days every company is providing very inexpensive (or even free) calls atnight. These calls are like Rs. 5 and, hence are affordable for even an averageteen. They talk all night long with their (girl/boy) friends. Use their pocket moneyto buy credits. At times, even they cheat their parents, and use mobile withouttheir permission. Many boys and girls also talk to their so called lovers. Whichcan be basically termed as a teen crush?

Sms Craze:

Messaging, messaging and messaging is what the teens do these days. It’s asymbol of being cool. The one who got more messages is considered the coolone. Teens forward jokes, romantic lines, riddles and even immoral adultmessages. SMS Craze in teens can be judged by the typing speed and their accuracy to type messages on little dial pad. They just thumb the mobile anddon’t stop.

Wap/EDGE:

Now days you don’t need to turn on your pc on to use internet. Internet is just aclick away thanks to wap/EDGE enabled mobiles. This service is good for thepeople who really need it. But teens normally use it to waste their time. First arethe messengers which don’t let teens sleep at night, then comes the facebookand other social websites to keep them awake.

Un registered Sim cards:

29




The last thing which is the biggest menace is the un-registered sim cards. It givesyou the passport to do all the wrong things because no one can catch you. Wecan bet that every single teen has a un-registered sim card. Our government triesso hard to block them but our teens are much smarter. You can talk to anyone,black mail them, do what ever you want.

MMS/Videos

There are hundreds of examples, where MMS and Videos of their lovers werecaptured by teenagers and what happens next is a topic that we are feeling is notgood to touch… but one can imagine the seriousness of the issue.

Bibliography

http://www.pcworld.com/article/158700/guess_which_county_texts_the_heaviest.html

30






http://www.dawn.com/2006/02/11/nat15.htm

http://www.brecorder.com/index.php?id=30899&currPageNo=1&query=&search=&term=&supDate=

http://en.wikipedia.org/wiki/Economy_of_Pakistan

http://artistryofbranding.wordpress.com/2008/08/28/the-state-of-pakistan%e2%80%99s-

handset-market-%e2%80%93-an-analysis/

http://artistryofbranding.wordpress.com/2008/08/30/an-insight-into-the-mobile-phone-

user%e2%80%99s-mind-the-battle-of-needs-aspirations/

http://telecompk.net/2008/12/15/late-night-calling-packages-and-pakistani-youth-1/


http://telecompk.net/2008/12/03/which-is-best-postpay-postpaid-or-prepaid/

http://telecompk.net/2007/03/28/cell-phone-users-in-pakistan-prefer-style-over-features/

http://www.lirneasia.net/wp-content/uploads/2007/06/teleusebop-pakistan.pdf

http://telecompk.net/2008/11/09/mobile-phone-repair-industry-of-pakistan/

http://www.mkhoj.com/home/advertiser/

http://telecompk.net/2008/11/28/rise-mobile-web-popularity-mobile-advertising-pakistan/

http://telecompk.net/2008/11/05/mobile-advertising-traffic-numbers-for-pakistan/

http://telecompk.net/2009/01/01/telecom-and-technology-megatrends-for-pakistan/

http://www.instaphone.com/en/home.asp

http://www.ufone.com/

http://www.mobilinkgsm.com/

http://www.telenor.com.pk/home/index.php

http://www.zong.com.pk/

http://www.waridtel.com/

http://metrics.admob.com/

31


http://www.brecorder.com/index.php?id=30899&currPageNo=1&query=&search=&term=&supDate



http://artistryofbranding.wordpress.com/2008/08/28/the-state-of-pakistan's-handset-market---an-analysis/


http://artistryofbranding.wordpress.com/2008/08/30/an-insight-into-the-mobile-phone-user's-mind-the-battle-of-needs-aspirations/
















































http://www.pta.gov.pk/index.php?option=com_content&task=view&id=266&Itemid=137



telecom cellular sector

Documents