Analysis of Telenor Pakistan

Telenor Pakistan is the fastest growing mobile operator in Pakistan and represents the largest Foreign Direct Investment in the country from Europe, in any industry, ever. The company is the first Greenfield mobile operation outside of Norway by Telenor ASA, the parent group, with an investment of USD 2 billion to date. Increased competition from international operators like Telenor, within an investor-friendly and stable regulatory environment provided by GOP, has been a major driver of growth and productivity in Pakistan’s economy, and has brought down end-user prices to among the lowest in the world.

Telenor ASA is an international provider of high quality telecommunications, data and media communication services. It ranks as one of the biggest GSM service providers in the world with over 153 million subscribers. It is also the largest provider of TV services in the Nordic region. It ranks as No. 25 overall and No. 5 in Europe in Business Week’s global ranking of the top 100 performers in the technology industry. The Group is recognized as the best Mobile Telecom company in the world by the Sustainability Yearbook 2008 and as the No. mobile operator on the Dow Jones Sustainability Indexes (DJSI) 2007.

Since its launch of services in March 2005, Telenor Pakistan has exceeded all expectations: It has created the second largest mobile network and the largest and most advanced data network in the local market, turned into the second highest revenue-generating mobile player with the highest Average Revenue Per User (ARPU) in the market, and become the second largest mobile player in the market with 18 million active subscriptions in little more than 3 years of operations.

During the first half of 2008, Telenor Pakistan added 3. 24 million subscriptions against the industry average of 1. 63 million, taking 33% of the market share of net additions over the period – the highest in the mobile sector in Pakistan. The company has created 2500 direct and more than 25000 indirect employment opportunities with 100,000+ retail outlets and 200+ franchises in addition. 99. % of these employment opportunities belong to Pakistanis. Initiated with a relief effort worth 95 million rupees in the wake of the devastating earthquake of October 2005, Telenor Pakistan’s community contributions have extended over the years to include education, empowerment, enterprise, and environment – with special focus on bringing the telecom promise within the grasp of the most disadvantaged sections of the society. Awards and Accolades

Telenor Pakistan has received several awards for its solid performance in key areas of activities:

• Federation of Pakistan Chambers of Commerce & Industry’s Telecom Excellence Award in Foreign Direct Investment in June 2006
• Central Board of Revenue’s High Tax Payer Award 2004-5 in January 2006
• The Pakistan Society of Human Resource Management’s Preferred Graduate Employer Award for Most Preferred Telecommunications Company 2007 among MBA students
• SAARC Communication Industry Conference 2007’s Most Innovative Mobile Operator Award and Mobile Operator with the Most Consumer Pull Award
• Telenor Global Brand Award for the year 2007 All Pakistan Dawn Aurora Advertising Awards in three of five nominated categories in March 2007
• The National Forum for Environment & Health’s Annual Environment Excellence Awards 2008
• Lahore Chamber of Commerce & Industries’ Appreciation Award for the Largest FDI and Rawalpindi Chamber of Commerce & Industries’ Achievement Award 2008
• The Helpline Trust’s 2nd Corporate Social Responsibility Award 2008 Telenor Pakistan is committed to bringing true mobile innovation to the under-served masses of Pakistan.

The company has picked up two Universal Service Fund projects in order to provide connectivity to the yet unconnected in the remotest areas of Pakistan. It aims to invest strongly for further network expansion into the rural areas and for the rollout of third generation of mobile technology (3G) in Pakistan. Vision & Values Our vision crystallizes our customer focus as the cornerstone of everything we do.

Telenor Pakistan acts responsibly and respectfully towards the people and authorities in different societies and aims to contribute to social and economic development in the local market. This is the essence of our commitment to Corporate Responsibility. We take seriously the social, ethical and environmental impact of our products and services. We place emphasis on making sure that the communities in which we operate see Telenor Pakistan’s as a good citizen with genuine ambitions to contribute to social and economic development. We give our employees reasons to be proud of the way Telenor Pakistan’s demonstrates Corporate Responsibility. Emergency Response Program

In order to respond immediately and effectively to emergencies/disasters, which may occur in Pakistan, Telenor Pakistan has launched an Emergency Response Program. Regional Go-Teams (consisting of Telenor Pakistan employees) have been trained to extend support and timely intervention if and when needed, free of cost.

Khuddar Pakistan is Telenor Pakistan’s flagship corporate responsibility initiative. With Khuddar Pakistan, we want to make a difference in the lives of our fellow persons with disabilities by addressing the challenges they face. We want to change the public mindset by creating awareness about their abilities. We want to help develop technologies that will give them the opportunity to actively participate in our society. We pledge to integrate persons with disability fully into our workforce. Currently, we are the only company in Pakistan to have a formal disability advisor and a disability advisory panel.

We sponsor assistive technology training labs for persons with disabilities at National Institute of Special Education, National Training Center for Special Persons (NTCSP), and Special Talent Exchange (STEP). We have the first corporate products & services/career website that is fully accessible and our staff participate in the first formal employee volunteerism drive in the corporate sector to work with persons with disabilities. “Join us in our drive. You too can make a difference. ” Fund-raising Initiatives Telenor over the time has initiated the fund-raising initiatives in order to help a certain cause. It requested to the customers through promotion to send a SMS to a number to raise funds. It initiated such program when Earthquake struck Pakistan in 2005; they raised funds to help the survivors in rehabilitation process.

Telenor brand The Brand: At the heart of our brand is our logo — a symbol of balance, movement and change. It represents our philosophy of innovation and democratic process, and takes its inspiration from Scandinavia’s long history of design “inspired by nature. ” Of course a brand is much more than just a logo – it is a set of ideas, a way of doing things and a measure of behavior. In many ways, Telenor already stands out. We have shown impressive growth and an increasingly international focus, particularly in new growing markets. But we can go – and need to go – much, much further.

Our aim is to be the most trusted mobile service provider in Pakistan Telenor Pakistan today is the fastest growing network in the country with a rich portfolio of products and services. We have introduced a number of industry-first products and provided customers with many convenient options of communication. Our brand is truly customer centric. We believe in understanding our customers’ needs — which are changing constantly — driving us to continuously innovate in our products and services. Macro environment in telecom sector Coupled with the technological trends, the revolution in the telecom sector has been driven by the dynamism in the telecommunications market globally.

The liberalization of the sector, the extension of services by multinational conglomerates across nations and the active competition currently in place in the sector have all contributed to the telecom revolution. Monopoly, a thing from the past In a monopoly scenario, a single supplier supplies the whole market. Traditional view of the telecommunications sector is that the telecommunications market was monopolistic in nature. Telecommunications industry was traditionally a natural monopoly, where the telecom services and the collection of products were supplied by one Telecommunication Company. In a monopolistic market structure, the company and the industry are identical.

The single company makes all the output and price decisions, it has complete control over the market. Traditionally, the telecom service providers, or operators have been government-owned monopolies. One major problem with telecom monopoly is that monopolist may exploit its market position, by charging excessive prices and compromise quality of service. With the reforms in the telecom industry, came a series of restructuring of the telecom industry. Today most developed countries are or have introduced competition in the telecom market that was once monopolistic in nature. Driven by technological developments, competition has come to dominate a market that was once a monopoly.

Amongst the wave of reforms that characterized the global telecom markets in the 80’s and 90’s, was the privatization of national companies. Privatization and liberalization are two telecom reforms that improve the public treasury. Since the processes of liberalization and privatization have been taken into consideration by countries such as India, Malaysia and South Africa, their telecommunication infrastructures have improved drastically. Malaysian government has developed its telecommunication infrastructure by privatizing the former RTT, which is presently known as Telkom Malaysia, and most of its shares are sold in the stock exchange. Privatization and liberalization cut the existence of monopoly and promote competition.

In the telecom sector, it could also include the opening up of market to private investment in the thriving telecom market. In developing countries, the realization that investment in the telecom infrastructure is a necessary foundation for economic growth, has further spurred the need for privatization. Cut-throat Competition The increasing competition in the global telecom market has greatly impacted on the telecom revolution. The liberalization of the telecom industry opened the doors to competition and brought an end to a period when telecom was considered a natural monopoly. Coupled with technological development in the telecom sector, competition has revolutionized the sector remarkably.

It has increasingly led to the expansion of telecom market and this expansion of market has increased access rate to telecommunication services. Two major issues are essential to the advent of competition in the telecom sector. They are 1) Liberalization Liberalization of the telecom market which leads to removal of barrier to entry, coupled with privatization of Telecom Corporation which encouraged private investment are precursors to the advent of full competition in the telecom sector. The introduction of competition means that a well-established telecom monopoly operator has to compete with new entrants in the different segments of the market. Competitors are diverse in their operations; they are not only limited to telecommunications operators.

With adoption of the liberalization program, many countries opened up their telecom market by issuing licenses to operators. 2) Technology The growing development in communication technology has increasingly made it impossible for a monopoly telecommunication corporation to provide the varieties of services available in the telecom sector. For instance the introduction of commercial Internet into the telecom market brought in an era of competing internet service providers and development in wireless technology-specifically cellular technology- has resulted in the era of cellular service providers. Competition in the telecom industry has stimulated growth in the sector.

Amongst numerous benefits, competition encourages: Choice: Customers are provided with varieties of products and services to choose from. Good quality: competing suppliers strive to out-do each other and invariably strive for good quality product and service in order to beat the competitor. This also ensures that the customers get quality products. Accessibility: products and services are provided in close proximity of the customers.

Customers do not to have to ‘go extra miles’ to have access to products and services. Prices: competing suppliers attract customers by attaching affordable and low prices to their products. Price is a strong tool used by competing firms to attract considerable ustomer base Improves and maintain standard: Competition encourages the improvement and maintenance of standards of products and services. This will help in attracting new customers and also gives satisfaction to current customers Stimulate growth: Competition stimulates the growth of the market and the economy in general.

The global market for telecommunications is expanding rapidly. It is not a question of “demand pull” or “supply push”. Both are happening. The interaction of these two forces has made telecommunications one of the leading growth sectors in the world economy. It has also made telecommunications one of the most important components of social, cultural and political activity.

On the demand side, growth is pulled by an increasing reliance on telecommunications and information technology in every area of human life – in all sectors of economic and social activity; in government, in the provision of public services, and in the management of public infrastructures; in the pursuit of knowledge and the expression of culture; in the control of the environment; and in response to emergencies, whether natural or man-made.

On the supply side, growth is pushed by rapid technological developments which continuously improve the efficiency of existing products, systems and services, and provide the foundation for a continuing stream of innovations in each of these areas. Particularly noteworthy is the convergence of telecommunication, information, broadcasting and publishing technologies, which has greatly enriched the communication choices available to consumers.

One other trend that is driving the revolution in the global telecom sector is the wave of mergers and acquisition that characterized this sector. This trend has changed the global telecom market enormously. There has been a high rate of merger and acquisition activity in the global telecom industry in recent years. Trans-Nationalization Trans-nationalization in telecom industry is a global trend that is revolutionizing the global telecom market. It is a form of corporate extension and cross-border service extension. Telecom market today is characterized by corporations buying shares in Telecom Company in other countries or totally setting up a similar company in another country.

Market integration is the character of business operation in the telecom market, it defines the manner in which one telecom company that operate in one segment of the telecom market extend its operation and integrate other segments of the sector. Market integration has enormously contributed to the revolution taken place in the global telecom market. Two main forms of market integration can be identified in the telecom industry

• Horizontal Integration This is when a telecom company extends its service provision to a competitive segment. This integration could be in a form of shares purchase or acquisition in cellular company or fixed line operator owning a cellular company.
• Vertical integration This takes place when a telecom firm in one market level of service provision extends its service to different market level in the chain of a telecom service provision.

An example of such integration is a dominant local access provider which also acts as an Internet Service Provider by rendering service in the internet service provision market. Arrival of the State Of The Art Technology Arrival of the new technology has changed the telecom landscape globally. Four major technological issues are shaping the ICT/telecom revolution. These are:

• The development in the capacity of transmission technology. New technologies such as optical fibre and the satellites have enormous bandwidth to carry information.
• The digitization of telecom networks: the transition from analogue to digital technology.
• Advancement in the wireless technology.

The convergence of hitherto separate communication formats; voice, data and images into a single multimedia platform. Trends in the User’s Device Developments in the manufacturing and design of user’s device, such as basic telephone, have undergone major dramatic changes over the years. Telephones have developed from the humble rotary telephone of the 30’s and 40’s to the modern day digital telephones. Modern phones can perform numerous functions; record messages, store phone numbers and many other functions.

The trend in transmission technology is the increasing development in the capacity of transmission technology. Telecom companies require technology that offer space and capacity that will allow them carry more calls at the same time and also allow them carry voice, data and digital images at the same time. This space is referred to as bandwidth. There’s been increasing development in transmission technology with large bandwidth.

This industry has witnessed a lot of improvement. For instance, telephony has developed from basic fixed line to wireless communication and the development of the internet has brought about millions of daily on-line telecommunications activities. The central office (CO) and the switching technology have gone through a number of fundamental technological changes.

The development in the wireless telecommunications segment has contributed immensely to the telecommunication revolution. Micro Environment in Telecom Sector Pakistan telecom sector remained stagnant for many years and no major progress was seen in this segment due to the monopoly of PTCL (larger power distance factor). But time changed and with the deregulation of telecom sector, investors found a friendly atmosphere and rushed towards Pakistan to take an advantage of these policies. The telecommunication sector around the world went through a process of radical change from monolith state controlled culture to an open market competitive environment. Same thing happened in Pakistan and there occurred a boom in the telecom sector in the area.

But the real action happened in cellular segment and the number of mobile users has outstripped fixed-line subscribers and Pakistan telecom sector became the fastest growing sector as compared to other countries of that area. Telecom industry has contributed a great deal to Pakistan’s economy and has called for great investments that lead to a new era of progress. Telecom sector is seeing extraordinary growth in Pakistan. With increasing levels of mobile penetration Pakistan is fast evolving as one of the telecom sector’s key investment prospects.

The market is comprised of 83 million mobile consumers served by 5 mobile operators. Telenor Pakistan has rapidly assumed the number two position behind the largest incumbent Mobilink, who have been operating for 13 years. The market is predominantly pre-paid and all operators are tasked with increasing ARPU. Price sensitivity and delivering coverage over remote and climatically demanding terrain are further challenges in this rapidly growing market.

Subscriber numbers are expected to exceed 110 million by 2010. De-regulation of Telecom Sector in Pakistan PTA successfully liberalized the telecom sector of Pakistan in an efficient, transparent and fastest deregulation of telecom in the region. The Government of Pakistan gave the status of Industry to Pakistan Telecommunication Sector with deregulation of telecom sector. The deregulation of telecom sector in Pakistan has brought about many changes in Pakistan’s telecom scenario.

It has resulted in creating competitiveness in telecom sector, provisioning of efficient & cost effective telecom services, improving infrastructure through private sector support, bridging the “digital divide”, meet ever increasing demand of telecom services, increase choice of providers & services, and last but not the least end monopoly in fixed line telephony.

Competitive Telecom Market Continued market liberalization is reshaping the regulatory environment, creating a more investment friendly climate in telecom sector of Pakistan. The sector is said to be growing at a fast pace on yearly basis. This growth rate of telecom sector is mainly because of the mobile phone service providers’ entry in the industry for the last few years.

Hence, due to the huge potential in Pakistan’s mobile phone sector, the industry and customers are experiencing an intense competition, a battle for supremacy in the mobile phone industry, between all mobile phone service providers of Pakistan. Improving Penetration & Tele-densities As of July 2009, the mobile phone subscribers are 95. 54 million in Pakistan and, in fact, still Pakistan has the highest mobile phone penetration rate in the South Asian region. According to the PTA, Mobilink continues to lead the market with 29. 55 million subscribers, followed by Telenor (21. 29 million), Ufone (20. 05 million), Warid Telecom (18. 14 million) and Zong (6. 48 million).

All Telecom companies are now working to broaden their network in AJK and Northern Areas, which were normally ignored till now. Till now 5 agencies of tribal areas are covered for mobile service. End of Monopoly can be captured. Telenor is also using this strategy of cost reduction to compete in the market. Because people are price sensitive so that’s why they lower the prices of product. Through cost reduction strategy Telenor offering late night packages to reduce the networking cost of booster.

Because during the night, up till the wee hours of the morning the load of communication traffic is very low that’s why they offered late night packages at very low cost. Product improvement strategy With a passage of time a product can lose the attraction it holds for a customer, therefore it is important to keep making innovative changes and improvements in a product so that it can be better places in a market, where different products/services of different competitors are vying for being the apple of the eyes of the customers. They make little changes in existing product. Like Telenor making improvements day after day in its Talkshawk packages.