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TABLE OF CONTENTS
1 INTRODUCTION..................................... ............................4 2 COMPANY ANALYSIS................................... ........................6
1.1 COMPANY PROFILE................................................................4 2.1 OPERATIONAL ANALYSIS............................6 2.2 HUMAN RESOURCE ANALYSIS...................14 2.3 MARKETING ANALYSIS.............................17 3.1 INDUSTRY AND MARKET ANALYSIS............27 3.2 COMPETITOR ANALYSIS............................35 3.3 TECHNOLOGICAL ANALYSIS......................40 4.1 Reports and Presentations.......................45
3 ENVIRONMENTAL ANALYSIS.....................27
4 DEPARTMENT WORK PERFORMED ...........45
5 IDENTIFICATION OF MAIN PROBLEMS.......55
4.2 Industry Issues...................................... ..53 5.1 Activation Tax.........................................55 5.2 Withholding tax..................................... ..55 5.3 Investment.............................................56 5.4 Devaluation of Currency .........................56 6.1 Network Connectivity Problem.................58 6.2 Dirty SMS............................................... .58 6.3 Rough/Unreal Ideas in Advertising............58 6.4 Too Much Advertisement..........................58 6.5 Advertising Budget..................................59 7.1 Installation of equipment with professional engineers.....................................................60 7.2 Call Rates & SMS Bundle offer..................60 7.3 Attractive Advertising.............................60 7.4 Control on Advertising and Budget...........60
6 FINDINGS............................................. ..58
8 CONCLUSION................................ ..........61 9 REFERENCES .........................................62
The overall consensus of industry analysts is that Pakistan is one of the countries with a huge
untapped potential for telecom growth and an attractive investment environment. Recently Business Monitor International (BMI) ranked Pakistan as a key destination for telecom growth. The BMI rankings take into account a number of factors including industry situation, growth potential, competitive landscape and economy and political risks etc. The Pakistan market reached the 90 million subscriber mark in September 2008, almost double from 2006 numbers. The growth slowed after that and at the end of November 2008 the total mobile subscriber number was 90.5 million. Pakistan needs to increase telecom research and development work within the country. China and India are in the process of becoming world major R&D centers for technology and telecommunication. Two top Chinese telecom equipment firms have announced their plans to collaborate with Pakistan: Huawei is working with UET Lahore and ZTE will setup R&D center in Islamabad. The goal of the policy makers should be to increase the rate of transfer of technology from abroad, broaden the pool of local skilled workforce and accelerate the local production of telecom equipment and handset parts etc. PTCL was established to operate cellular telephony. The company commenced its operations, under the brand name of Ufone, from Islamabad on January 29, 2001. 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 5442 locations and across all major highways of the country. Ufone, a wholly owned subsidiary of Pakistan Telecommunication Co. Ltd (PTCL), is now under the control of ETISALAT group of UAE. It has 21% of subscriber share and added the most lines (2.4 million) from 2006-07. For those in Pakistan it is the one company where they can easily invest locally. Ufone is maintaining its subscriber’s base in market. However the company needs a big push from its owners ETISALAT in shape of more investment to increase and enhance its network and its quality.
1.1 COMPANY PROFILE
Pakistan Telecom Mobile Ltd, operating under the brand name of ‘Ufone’ a wholly-owned subsidiary of PTCL commenced its operations on 29th January 2001 as a GSM 900 service provider. Since the outset it has expanded its coverage and customer base at a rapid pace and established itself as one of the leading cellular service providers in Pakistan. Ufone is now considered to be one of the most active, aggressive and innovative players in the mobile sector of Pakistan. The growth of cellular sector in Pakistan can also be attributable to good governance and conducive policies of the government of Pakistan In connection with that in April 2006 Emirates Telecommunication Corporation, which is commonly known as Etisalat, has assumed management control of Pakistan Telecommunication Corporation Ltd – part of the $2.6bn deal to buy a 26% stake. The successful privatization of PTCL, and consequently Ufone, is hailed as ushering in a new era for telecommunications in Pakistan. As mobile users in the country have reached 88 million at a very rapid pace, Ufone has a subscriber base of nearly 17.5 million and a market share of nearly 21%. Ufone has seen a subscriber growth of over 10 million since July 2007 onto its network. Subsequently the growth in subscriber base caused a healthy trend in its revenues and margins. Ufone has always played a pivotal role in the development of cellular market in Pakistan. For most part it has been a step ahead in introducing innovative products to the market. Ufone was pioneer in launching the GPRS services and Multi-media Messaging Service (MMS) in Pakistan, including the lead in introducing GPRS international roaming and prepaid international roaming for these services in the Pakistani market. Currently Ufone has expanded its product portfolio to include Black Berry handsets and providing one of the largest EDGE networks in the country today. Ufone understands the need to communicate effectively and efficiently at all levels of society, which is why various products are catering for the needs of the Pakistan corporate market. It offers services such as
mobile office, Virtual Private Network (VPN), and a lot more to revolutionized communication. Ufone provides International Roaming facility with more than 215 international operators across 124 countries. Ufone has GPRS roaming agreements with more than 100 international operators and also provides prepaid roaming facility to more than 15 destinations across the country.
2 COMPANY ANALYSIS
2.1 OPERATIONAL ANALYSIS
Ufone’s operational performance has been very encouraging. Despite the stiff competition in Pakistan telecom market which has led to reduction of prices to bare minimum level, due to its aggressive policies and exercising strict control over expenses the Company managed to improve its revenue and after-tax profit by 87% and 54% respectively, as compared to last year. 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 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. A strong focus of Ufone is on maintaining high quality of service, which is always a benchmark of Ufone, increasing usage and exploring new revenue streams on value added services, market visibility through various market initiatives to fulfill subscribers’ satisfaction and demand and above all to increase the value of investment for the shareholders. Moreover, efficient working of the workforce in the organization makes it possible to lead the market and maintain competitive edge over the competitors. The organizational operations can be clarified by studying the nature of Ufone’s organizational structure and hierarchy. 2.1.1Organizational Structure The organizational Structure at Ufone is Lean or Horizontal structure. One of the organizational functions of Ufone in relation to its hierarchy is, the company is having Decentralized structure. The flow of communication becomes easy and simple in such structure. It is divided into different departments and every department has its head and all are interconnected. The concept of Departmentalization is effectively in practice at Ufone. There are different departments which are working within their functional units to contribute towards the success of organization and to achieve the over all goal of the Organization. Ufone has 8
departments that are working efficiently and all are interacting with each other to make it a much better company by satisfying its customers demand. The structure of Ufone comprises of Board of directors who are being reported by CEO, Chief Executive Officer. CEO is a great supervision to the 8 Major operations of the company. These operations are divided into departments that are:
2.1.2Finance Department The head of finance department is designated as CFO – Chief Financial Officer or Vice president of financial head. There are further 4 subheads in Finance Department: • CNC The department is responsible for Credit exposure for Ufone postpaid connection. The department maintains the record of all postpaid subscribers in order to ensure the subscribers validity. Budgeting and Planning The department is working over the budgets, the planning of budget and its reports to the authorities. This head provides the annual budget to be spent. The function of this head is also to forecast any opportunities or threats towards the organization. The reporting of the budget is being done on the monthly basis to the head of financial officer to keep the record of the budgets. Relationship with banks are also being maintained in order to get help in the need time. Accounts The accounting head is responsible for the book keeping of the records. The internal audits are done to ensure the stream lined working of the processes as well as external audit by the Accountancy firms. Revenue Assurance There are Revenue Assurance policies & procedures being made by the personnel. This assurance head also Liaise with other departments, obtain, analyze and reconcile reports to ensure prevention of revenue leakage. The sub-head also ensure error free billing operations, deployment of key revenue assurance applications/solutions, fraud management.
2.1.3Marketing Department The head of marketing department is designated as CMO- Chief Marketing Officer or Vice President of Marketing Head. The department has further 3 subheads working in specialized manner according to the skills and abilities of the employees. • Brands There are basically two products of the Ufone which serves as the brands of the company. This sub-head is responsible for the execution of the Brand Activities. Ufone is performing the promotional activities in Brands sub-head, including advertising over Electronic media and print media. The promotional strategies are made by the sub-head to get the implementation. Marketing Strategy and Analysis The sub-head is working in order to formularize the marketing strategy according to the market requirement and consumer preferences. The analysis about the market trend is done and the strategies are made in relevance. Moreover, competitors are biggest source of reacting towards the marketing activities. Ufone is having a proactive marketing concept in context of competition. VAS – Value Added Services VAS sub-head is responsible functioning of conveniences provided to the customers, these VAS are Virtual Private Network, Call Management, Missed Call Notification, Phonebook Saver and a host of Infotainment and Entertainment services. 2.1.4Information Technology Department
While being a part of information technology and telecommunications, Ufone is having a major department of Information technology. The head of information technology is termed as CIO- Chief Information officers. IT department is working with the division of further 2 sub-heads.
Billing The billing department is responsible for aggregating CDRs and preparation of the postpaid billing for customer from system. IT Development Any kind of IT development required by the company in billing or CRM (Customer Relationship Management) module is done by IT development team.
2.1.5Customer Operations Department
One of the departments to preserve the existing consumers, Ufone is having a department of Customer operations; the head of this department is designated as VP COPs – Vice president Customer Operations. The department is having 2 further sub heads. • Customer Care Ufone provides customer care through Customer Care Center located in all key cities, across the country. Ufone’s customer care representatives are more helpful. They will not only resolve Consumers issues but also guide them into customizing Ufone, according to their needs. Customers care is offered to through
Call Centre Cal centre representatives are providing services, 24 hours a day. The customers can contact the Ufone Call Center to get answers to all their queries. Some of them include: Bill enquiry (credit limit, expiry date etc.) Reporting of lost phone Number blocking in case of lost or stolen SIMs Connection status (active / inactive) Tariff Products information Ufone Sales & Service Center information Nearest dealer information Ufone coverage areas Emergency number information International roaming information Value added services information Missed call alerts Call forwarding Conference call FNF Activation / Changes Post Pay Reward Redemption
o Business Centre The business centre of Ufone are offering various services to their customers, they are basically company owned centre, the business centre offers the SIM issuance and other customer related issues, retention of customers and handling requests for Mobile number portability. • Govt. Relations
PTA – Pakistan Telecom Authority is the regulatory authority in Pakistan concerning the network operators as well as telecommunication practices. Ufone is also abiding the rules that are being made by PTA. The relationship with PTA is also being maintained as PTA is Govt. regulation. 2.1.6Engineering Department The engineering department is Backbone of the company. The head of the department is termed as CTO - Chief Technical Officers or Vice president. The Engineering department is divided into 4 sub-heads • BSS – Business Support System The subhead is responsible for Radio Planning and network optimization.
NSS – Network Switching Subsystem The Network Switching Subsystem, at Ufone refers to as the GSM core network, usually refers to the circuit-switched core network, which is being used by ufone GSM services such as voice calls, SMS, and Circuit Switched Data calls. There is also an overlay architecture on the GSM core network to provide packet-switched data services and is known as the GPRS core network. This allows mobile phones to have access to services such as WAP, MMS, and Internet access. All mobile phones manufactured today have both circuit and packet based services, so Ufone as a network Operator that is having a GPRS network in addition to the standard GSM core network.
IN – Intelligence Network The Intelligent network’s main purpose is to take care of charging of prepaid customers and has the balance updates of each of the customer.
2.1.7Sales Department The sales department at Ufone is headed by Vice president Sales. The department is being divided into 3 main sub-heads.
Corporate Sales the division of the sales department is handling the sales for executives or corporate clients. These clients are having postpaid products with billing system.
Franchises & Retail Outlets this division is handling franchises and retail outlets with a network of more than 365 franchises and 25 company-owned customer service centers along with a distribution network of 150,000 outlets nationwide. Sales operations Sales operations at the company have been set up to provide the customers, quality services all under one roof so consumers can walk in to any Ufone Sales & Service Center for services like: • • • • • • • • • • • • • • • • • • • • • • Mobile Number Portability Connection purchase Bill payment SIM Activation Number blocking in case of lost or stolen SIMs Transfer of subscription Changing access levels Number change Address change SIM replacement Product / package change Activation of VAS Connection closure Handset & other mobile accessories PIN / PUK code number inquiry GPRS IR activation Missed Call Notification Call Forwarding Conference Call FNF Activation / Changes Post Pay Reward Redemption
2.1.8Human Resource Department
Human Resource department is being headed by the HR executive designated as Chief of Human resource department. The department is working for the personnel in the organization. There are 3 main sub-heads in the department •
Recruitment and Compensation Benefits Ufone has this policy of not mentioning the name of the company in a job advertisement. Usually hiring takes place through
outsourcing with a help of a third party. Final selection takes place after the candidate has been interviewed by the Manager of the department who requires the new employee and then the HR Manager. A very effective way to retain an employee is to give him compensation and benefits. At Ufone following benefits are given: Medical Facility to employee and his/her parents and Paid Vacations, Gratuity, Provident fund etc.
Training Training & Development involves improving the knowledge, skills and abilities of the individuals. A continuous training is conducted inside Ufone to improve the performance of the employee. There are two types of trainings conducted at Ufone: In-house Training and External Training. HR Operations HR operations at Ufone include the working over all Human resource Functions that are o Orientation o Human Resource Planning o HR hiring / recruitment o Selection Process o Compensation and benefits o Training and Development o Human Resource Information system
Strategic Planning Department o This department directly reports to Chief Executive officer.
Ufone views strategy as an overall approach and plan. This department monitors the executions of strategic plans and goals across the business. So, Strategic Planning at company is the overall Planning that facilitates the good management of a process. Ufone strategic planning is providing the big picture of company’s operations and long term goals.
o Forecasting the opportunities o Building Synergies o Long-term Planning
Implementation of Strategic Plans
2.2 HUMAN RESOURCE ANALYSIS
Currently there are over 1500 permanent employees working in Ufone nationwide. On the entry level the HR Department is mostly taking MBA graduates. According to Ufone their belief is that "Their people are their greatest asset”. The HR team takes great pride in acknowledging the contribution of each employee. Ufone focuses a lot on HR Developmen nt and for that the HR team ensures: • • • • • • • Staff of Ufone consists of world class Professionals and Ufone ensures that the right systems are in place to encourage people to develop to their full potential Collaborative and mutually supportive work environment is created that encourages people to grow Team of professionals is built which delivers expertise by participating in business decisions Performance Management and Reward Systems are developed which underlies the Business strategy of Ufone A clearly defined Recruitment & Selection policy is defined The need for Training & Development of employees is assessed Compensation & Benefit plan is developed which ensures that employees are motivated
• Ufone is basically equal employment opportunity organization. Almost 70% of its employees are male and 30% are female. The job description of each and every employee is predefined. Performance appraisal is done on annual basis. Average age of Ufone employee is 32 years. This shows that they prefer young and energetic people for their middle and lower level management. High profile well experienced persons are considered for top level management. Average Salary is 12000 for a Ufone employee. 2.2.1Management In Ufone the hierarchy is very lean, in general the whole setup is centralized all the matters are to be reported to the head office and all the policies and targets are approved at the higher level. But at the branch level the structure is decentralized. 2.2.2Personnel There are about 150 employees who are working in the Ufone Head Office and 2500 employees serving nationwide. All of them are very devoted as they are given a wonderful learning environment to work, pay offered to them is also very attractive and ample chance of progress motivates them to work more. The job analysis is done on
targets assigned and daily routines. The employees are indeed very satisfied and motivated. 2.2.3Recruitment & Selection Recruitment is the process of gathering a pool of candidates for an organizational vacancy. Selection is the process of short listing only the qualified candidates who are fit for the job. In terms of recruitment and selection it is important to consider carrying out a thorough job analysis to determine the level of skills/technical abilities, competencies, flexibility of the employee required etc. And HR at Ufone follows these criteria. Ufone policy of recruitment is very simple, if at any time there is a vacancy, due to retirement, resignation, if employees opted for the golden handshake or the death of an employee, the management of the branch will inform the head office about the vacancy. The head office will place an advertisement in all major newspaper with the all necessary information required to be furnished by the applicant. Ufone has this policy of not mentioning the name of the company in a job advertisement. Usually hiring takes place through outsourcing with a help of a third party. Ufone mostly hires employees through Pioneer Services and Sydiat Haider Associates. Final selection takes place after the candidate has been interviewed by the Manager of the department who requires the new employee and then the HR Manager. On the joining day, the employee has to submit the following documents to the HR Department: • • • • Joining Report Copies of educational and professional degrees/certificates Reference Letter Three copies of recent passport size photographs
2.2.4Training & Development Training & Development involves improving the knowledge, skills and abilities of the individuals. A continuous training is conducted inside Ufone to improve the performance of the employee. There are two types of trainings conducted at Ufone:
In-house Training: In-house training is customized training which is only for Ufone employees. External Training: External training is carried out through trainers in training institutes.
2.2.5Compensation & Benefits A very effective way to retain an employee is to give him compensation and benefits. At Ufone following benefits are given:
Medical Facility to employee and his/her parents Paid Vacations
2.2.6Orientation A newly hired employee is oriented so that he can get an idea about the organizational setup so that he may feel at home. At Ufone orientation plan covers the following points: • • Visits to different department of the company Company’s Policies, Rules and Regulations
2.2.7Human Resource Information System (HRIS) At Ufone profiles of all the employees containing data relating their payroll, leaves, benefits etc is saved in a database known as HRIS. Ufone uses a locally procured HRIS which is to be upgraded using Enterprise Resource Planning (ERP).
2.2.8Human Resource Planning Planning provides a guideline to accomplish an activity. At Ufone the HR team plans everything so that the outcomes and results can be perceived before the plan is actually implemented. This makes the planning more accurate and efficient; it also saves time and money.
2.3 MARKETING ANALYSIS
Ufone is having 2nd largest number of subscribers. Ufone has been attracting the masses since the time of its origination. Ufone is also known for its quick marketing. MARKETING MIX I have analyzed the marketing mix of the Ufone. Marketing mix includes the analysis of the firm’s product, pricing, promotion and placement. Ufone’s marketing mix can be 2.3.1PRODUCT Ufone understands the value of words and the need to communicate effectively and efficiently at all levels of society, which is why company’s primary focus is on U. Ufone offers, Prepay & Postpay services in the Telecom sector. • Ufone Prepay Ufone prepay is the product segmented for the youngsters. They are segmented on the basis of their age and status. They recharge through the prepaid cards whenever they feel comfortable to load the cards. • Ufone Postpay
Ufone Postpay is created for the executives and business class people, who require making calls within the country or internationally for the business purposes. Business executives enjoy the benefits and value added services connected with Postpay product of Ufone Ufone For Everyone The telecom market’s growing rate in Pakistan is higher than any Asian country. Ufone offers lower rates and better network then other already established cellular companies. All living standards have been captured by Ufone, like Students, Labor and Businessmen, etc. Ufone aims to provide with wider coverage, superior connectivity, clear signals & voice quality to their valued customers. 3
U-Circle Prepay provides an easy way to call Friends & Family. Ufone is making it easy for its consumers to call friends & family with U Circle. Now the consumers can talk more for less with the most economical rates to call their Ufone Circle. U Share Ufone Prepay customers can now share their balance with each other through a simple SMS in 3 easy steps.
Mobile Number Portability Ufone welcomes consumers to bring their mobile number to the best service. Through Mobile Number Portability (MNP), mobile phone subscribers can retain their mobile phone numbers when they change mobile operators. Therefore a 0300-xxxxxx or 0345-xxxxxxx can be a Ufone customer in the MNP regime. 2.3.2PRICING As compare to other telecommunication companies, Ufone offers its services with lower and affordable rates. The price of product matters in the market but low price with high density service is not an easy task to accomplish. For the satisfaction of valued consumer Ufone merged the low Price and high density services with wide network. Both, the Prepay & Postpay tariff are being defined as follows:
Call Charges Prepay Tariff
Ufone Prepay Tariff (Rs.) Per Minute Outgoing Call rates / Peak Hours (7am - 10pm) Outgoing Call rates / Off Peak (10pm -7am Within Ufone Community To Other Networks* To PTCL
Ufone Postpay provides you with matchless call plans to suit your lifestyle and connectivity drive. Use your Ufone Postpay for business or leisure and stay connected all the time.
Call Charges Postpay Tariff
Ufone postpay Tariff (Rs.) Monthly Line Rent Postpa y ZLR 0 Postpa y Ease 199 Postpa y Value 399 Postp ay Extra 999
Outgoing Call Charges (per 30 seconds) Ufone to Ufone Ufone to Other Mobile Operators Ufone to PTCL & WLL Network 0.90 1.15 1.00 SMS Charges Ufone to Ufone Ufone to Other Mobile Operators 0.50 1 Free offers Free Minutes Free SMS 0 0 Security Deposit Local & Nationwide International Dialing International Roaming 750 2,500 15,000 1,000 2,500 15,000 1,500 3,000 15,000 2,500 5,000 15,00 0 200 25 400 50 1000 100 0.50 1 0.50 1 0.50 1 0.60 1.10 0.80 0.50 1.10 0.70 0.40 0.90 0.60
Highlights of Recent Earning Report
For the first quarter 2006-07 ending October 30, 2006 Ufone profit before tax was Rs.7.7 billion with net Profit of Rs.5.1 billion, which is 7% lower than that of the corresponding quarter of last year. For the full year 2005-06 after
tax profit was Rs 20.78 billion which was 22% less than previous year’s profit. Dividend of Rs 3 per share was awarded which corresponds to an impressive dividend yield of 12.3%.
Pricing Strategy Pricing strategy plays very important role to acquire market share where giant competitors are already working and moving ahead. Ufone has implemented low pricing strategies to reach its objectives. Pakistan’s mostly population contains on Middle class and working class people. In this view the low pricing strategy of Ufone gets attention of many customers. In the early age of Ufone launched, they decide their logo by the people opinions that boost its products. An advertising campaign launched showing Bakra Market that relates to middle class of Pakistan. 2.3.3PROMOTION For the promotion of product, print media, electronic media, billboards, broachers and leaflets has been utilized for the awareness of various customers. Time to time, Ufone promotes its services / schemes to their users and general public via using various type of promotion channels. Through the advertisements people get awareness about the product and are able to choose the best one for fulfill their requirement in Mobile Telecommunication.
Ufone is making use of electronic media through Television advertisements. Ufone is having its great deal of advertisement on television, to aware its consumers about the latest product offerings. The interesting part is that Ufone is sticking with its humorous appeal and is doing really good in it. Ufone is famous for its own style of humorous advertisements which are truly becoming the talk of the town. Ufone is motivated with providing best ads to people with quick service. Advertising campaign is special and impressive than other cellular companies, like concept, models, colors scheme and visualizing. The
advertisement of post pay has been very much attractive for the business class customers with the slogan of endless possibilities. • Print Media
Ufone is actively providing its advertisements in print form as well. They are using various ways as a means of promoting the brand. Ufone’s advertsisments can be seen in newspapers and magazines. Ufone is vigorous in attracting people and making them upo date about any new information through print media as well. • Billboards
Billboards (Including skyscrapers) are the key sources for the promotion of Ufone. Ufone is also in practice with placing billboards to the prominent areas, which are having the most contact of the people. These billboards are the reminders of the brand through which people get attracted. New packages or any updates about the product features are displayed. Different kind of advertisement can be seen on Television and billboards. Ufone is also a co-sponsor of Cricket World Cup 2007. Moreover, the shops title boards are also being sponsored by Ufone over all Pakistan. Now retail stores and shops have also “adopted” the mobile brands. People are seeing fabric stores, toy stores and even doctor’s offices displaying the phone company brand signboards. • SMS Marketing
Ufone is not only making a use of electronic media as its promotional activities. But Ufone is also doing marketing of its new packages, their updates, any new offerings through SMS. Ufone is committed to retain its existing customers to get switched to other network operator. Through SMS marketing, Ufone is making its consumers aware, with new items launched and easy way to exercise those facilities by Ufone. • Internet Marketing
There are users who are active users. They are in continues contact with www i.e web. These users try to find the solutions through internet. Ufone website (www.ufone.com) contains bunch of information about the product, services, coverage, placement, and value added services. Website is playing a leading and significant role for the promotion of product. Ufone is promoting its brand through cyber marketing in which they have placed their brand’s slogans and latest reviews. For example they have placed banner ads on various sites. The renowned community FACEBOOK is also having its advertisements on the right pane of the window. Call operators of customer service department are professional and proficient to resolve consumer problems and they are 24 hours available to respond customer’s query. 2.3.4PLACEMENT Ufone added 4.0 million subscribers in 2007-08 as compared to its addition of 6.5 million in previous year. 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. Ufone is the network operator which Operates with a network of more than 365 franchises and 25 company-owned customer service centers along with a distribution network of 150,000 outlets nationwide. Ufone is covering over 5442 key destinations. Ufone is the ultimate means to stay connected wherever business takes consumers allowing seamless roaming through the network providing the best nationwide coverage. Ufone, being one of the leading cellular service providers has recently launched its service in many new cities. Keeping up with its pace it is rapidly expanding its network. 3
Ufone keeps on adding new cities with same superior network that continues to expand. Ufone covers all major cities of Pakistan now consumers can enjoy comprehensive coverage in areas like the GT Road, Super Highway & Motorway etc. So wherever they are in Pakistan, Ufone keeps them connected. Ufone’s Network Up gradation Under the agreement, Huawei will provide its future-oriented EnerG GSM solution to expand Ufone's network to cover over 1,500 cities, towns, villages and all major highways in the country. The network also allows Ufone subscribers to enjoy high-speed wireless data service. The GSM contract for Ufone also include Huawei's new generation GSM dual density BTS that feature high integrated and receiving sensitivity to improve the network performance and lower the cost of network construction and O&M expenditure. In addition, Huawei will provide Mobile Softswitch solution based on the advanced R4 architecture to satisfy Ufone's network expansion requirements, enables the telecom service provider to evolve into 3G smoothly 2.3.5Market Segmentation Ufone is segmenting the market according demographic segmentation, i.e. on the basis of age groups. Ufone has segmented its product on the basis of its features. • • Ufone Prepay is segmented for the youngsters, whit attractive packages to their requirements Ufone Postpay is segmented for the people of mature age, having their own business, belongs to business class or people who are senior executives of the organizations
2.3.6Target Market Ufone has the target market concerning youth in the nation. This target market of youngsters comprises of the 40% population. Ufone is having focused advertising towards the target market simultaneously focused brand building over the market segment of youth. Ufone is targeting the emerging segments of middle class in the population to increase the number of subscribers as well as the revenue generation from these subscribers
Ufone has also targeted the corporate class, for which Ufone is customizing the packages in order to preserve the existing small but profitable corporate of SME market segment. 2.3.7Market Dominance Ufone is having a concept of Market dominance. Ufone is a measuring the strength of its brand, product, service, and firm, relative to competitive offerings. For being competitive in the market and while following the strategies based on market dominance, Ufone has become the LEADER, instead of follower or challenger of new offerings. While being a leader of the various offerings, it has maintained the marketing of its product within shortest span of time. This maintenance has been done in order to make people aware about the latest offerings of the Ufone. 2.3.8Market Differentiation Due to aggressive competition in Pakistan mobile companies, the operator needs to differentiate their product from others in order to attract more and more customers. Ufone with its basic or core product which is becoming homogenous with the other’s products is struggling to introduce the differentiating offers for the consumers. In the telecom industry, for differentiating the product means to bring and implement some new and innovative technology. Technological improvements at Ufone are continuous process. These practices of bringing something new to the society at Ufone are emerging in the context of GPRS and 3G services. Ufone is not only emerging technologies but also maintaining a technological dominance for the services it is providing. Ufone is coming up with innovative products and becoming pioneer towards the new arenas. Ufone is launching innovative packages and products for enhancing its revenues. The basic focus of Ufone is to enhance its VAS- value added services. Ufone is providing as much as convenience to its consumers as they expect. Some of the value added services offered by Ufone are • • • • • • Missed Call Notification Phonebook Saver My Ufone Account Services Infotainment Urdu Info Services Trivia Quiz
• • • • •
Pocket Data Services Virtual Private Network Call Features Messaging Services U-Share
3 ENVIRONMENTAL ANALYSIS 3.1 INDUSTRY AND MARKET ANALYSIS
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 CM Pak, a China Mobile subsidiary in Pakistan. CM Pak 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 200708 against a record growth of 48% in the year 2006-07. Cellular subscribers grew by about 40% in the year 200708, 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 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.
3.1.1Major Product Lines Market Segment MOBILINK Mobilink is having two major products which have catered the market of consumers. Each of the products is having its distinct services in according to the segmentation of consumers. • Indigo Mobilink indigo is one of product of Mobilink Orascom Telecom Company, this product line has been launched to attract the executives of the companies, in order to facilitate them according to their business requirements. Indigo offer the business consumers to Enjoy value that remains unrivalled with an enhanced indigo lifestyle that better delivers on thier businesses and personal communication needs. Mobilink indigo has provided their consumers with postpaid experience, with several of distinctive facilities. Indigo is providing holistic coverage with international roaming for the business executives and superiors. Freedom plans are also one of the benefits to the consumers as discounted airtimes to pursue the business communication at the right time. Like all other products, the Mobilink indigo is also providing instant customer care. Jazz
Another product of Mobilink is JAZZ. The product is segmented to cater the young profiles in the country. Mobilink’s mostly sold product is JAZZ. As it is giving the youngsters the joy and colour to their lives according tot their requirement. Jazz is providing a bouquet of benefits in the form of full services, attractive call rates and network reliability, jazz liberates its jazz subscribers from the shackles of silence, so that the consumers can better express themselves. The product offers the prepaid perspectives but the nature can be changed to postpaid as well. Due to large sales of the product, its being used by the subscribers of different ages.
TELENOR Another international telecom giant in Pakistan industry is Telenor. Telenor is offering three products to its subscribers.
Persona Telenor is offering a great product deal for the business managers and executives. The professional lives of the subscribers are benefitted with the Persona cellular connection. Persona is Postpaid connection and is giving the consumers with instant connectivity, simple and uncomplicated billing and a host of value added services with EDGE for the first time in Pakistan and international roaming for the excutives in almost 125 countries. Djuice Djuice is another telenor’s product, this product is Telenor’s international youth brand and was first launched in Norway. Since then, it has rocked youth in Sweden, Ukraine, Hungary & Bangladesh. Pakistan is the addition to the djuice family, having launched in March 2005. Since then, djiuce is attracting youth with different services innovative in nature. TalkShawk Telenor Talkshawk is the most famous among the telenor products, the product is prepaid connection with various conveniences. The talkShawk Connection of product is Prepaid connection for its subscribers.The smartest package to call any network, anytime with amazing call rates, freedom to recharge through Easyload.
WARID TELECOM Waridtel is providing the products to its subscribers distinguishing them in consumers and corporate users. For consumers Waridtel has segemented the pdocts in two product lines. • Consumer Postpaid: Postpaid product is offered to consumers with various servives and facilities. It offers the comsumers to make the payment of bill conveniently thorugh emails or scratchcards. There are various postpaid tariffs to meet the requirements of the consumers.
Consumer: Zem Zem is the prepaid product of the warid tel, it offers the subscribers to enjoy a prepaid convenience that is backed up by the promise of service, service & more service. Not only it is
simple to use but it also offers a host of revolutionary products & features that will forever change the way consumers communicate. • Warid Corporate Warid Corporate product is Exciting‚ efficient and time saving solutions are available to meet all corporate needs‚ facilitating the flow of communication of valuable corporate/individual clients. Warid gives consumers the access and flexibility they need wherever they go. It provides Wireless Broadband promoting connectivity everywhere, Enterprise SMS, corporate clients can send bulk messages to their customers for promotional activity, Warid Mobile Email (WME) UFONE Ufone is offering the products which are categorized on the basis of their connection nature. There are basically two products of the Ufone which are facilitating the consumers. • Ufone Prepaid Ufone Prepaid is consumers brand, vibrant, innovative and unique, with an identity that’s entirely its own. Ufone prepaid is attracting the youth of Pakistan. Ufone recognizes the need of consumers to stay in touch with friends and family which is why Prepaid scratch cards are available in four denominations to suit their budget; so consumers can charge their phone easily with their pocket. Ufone offers value added services; sending the MMS to various contacts, There’s Voice mail for when subscribers are unable to attend their calls, ofcourse consumers need to keep in touch with friends all the time and calling isn’t always convenient, that’s where SMS’s come in; so consumers can put their thumbs to good use. Consumers can download all sorts of cool picture messages, wallpapers, ring tones, logos and what not from the Ufone website onto your cell phone. • Ufone Postpaid
An endless possibility of Ufone Postpay is a connection that connects with customers determination to conquer all odds. Ufone Postpaid is a brand that keeps up with consumers, understanding their drive for victory in the business arena and your sense of belonging in your personal life. So the segmentation is based on the business superiors and high profiles. On the road to success, Ufone Postpaid is a brand for those who expect more from life, from themselves and from their phones, so turn your mobile communication into the unique experience you always wanted. Ufone aims at providing consumers with the most superior mobile phone services, widest quality network & best customer services for consumers on their journey to success. Ufone Postpaid is designed to suit your life style & communication drive. 3.1.2Growth Rate for the Entire Industry The growth rate of the Pakistan’s cellular industry can be measured through the number of subscribers in Pakistan. The growth of these subscribers can be analyzed through the provincial subscribers. Subscribers Growth Penetration and
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 Markets. Subscription of 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. 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 Sector 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 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 Baluchistan 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.
3.2 COMPETITOR ANALYSIS
3.2.1MAJOR COMPETITORS Ufone is facing competition from 4 network operators operating within Pakistan, among which, warid and telenor and multinational organization. MOBILINK Mobilink GSM (PMCL), a subsidiary of Orascom Telecom, started its operations in 1994, and has become the market leader both in terms of growth as well as having the largest customer subscriber base in Pakistan - a base of over 31 million and growing. Mobilink pride ourselves on being the first cellular service provider to operate on a 100% digital GSM technology in Pakistan that also provides state-ofthe-art communication solutions to its customers. Mobilink offers exclusively designed tariff plans that cater to the communication needs of a diverse group of people, from individuals to businessmen to corporate and multinationals. To achieve this objective, we offer both postpaid (Indigo) and prepaid (JAZZ) solutions to our customers. Compared to our competitors, both the postpaid (Indigo) and prepaid (JAZZ) brands are the largest brands of their kind in the Pakistan cellular industry. In addition to providing advanced voice communication services that makes the lives of millions that much easy, we also offer a host of value-added-services to our prized customers. At the same time, Mobilink places high importance to its coverage, which is why we cover you in 10,000+ cities and towns nationwide as well as over 130 countries on international roaming service. In other words, we speak your language, everywhere.
• • • • • • • • • •
Strengths Market Leader (Market share) Largest Network Coverage Strong Brand (Jazz) High %age of high end customers Low network dependency on 3rd Party (own backhaul fibre & LDI) On net advantage Can charge price premium Strong media presence Financial muscle through strong top line Experienced & dynamic team
• • • • • • • •
Weakness Most exposed to loss of customers Weak customer care Billing issues & hidden charges Technical issues due to mix of old & new infrastructure and multiple vendors Slow process due to OT Internal bureaucracy Unsustainable opex structure
• • • Extensive rural market presence Geared for 3G
(Substantial high end customer base)
• • • • • Industry reaching maturity Higher probability of churn in the industry Customer loyalty low in the industry MNP major loser in industry Price war can hit more
Presence in international financial market
(No hurdle in International borrowing)
• • •
Able to hire cream resources from mkt Use of MVNO to increase revenue New Revenue streams
(Mobile advertisements/ mobile commerce etc.)
Telenor Pakistan launched its operations in March 2005 as the single largest direct European investment in Pakistan, setting precedence for further foreign investments in the telecom sector. The company has covered several milestones over the past twenty eight months and grown in a number of directions, Telenor have grown to become a leading telecom operator in the country. In fiscal year 2006, Telenor achieved nearly 200% growth in our subscriber base – the highest in the industry by a wide margin. Telenor are the fastest growing mobile network in the country, with coverage reaching deep into many of the remotest areas of Pakistan. In the most difficult terrains of the country, from the hilly northern areas to the sprawling deserts in the south, at times we are the only operator connecting the previously unconnected.
• • • • • • • • • • • Global Operator Strengths Aggressive rollout of network Brand consistency Strong retail network Employee loyalty (HR) Quick reaction to competitors 100% equity financed operation Long term vision for profitability Strong & effective marketing Strong vendors (Nokia siemens) Maintaining substantial growth in revenue • • • • Top management “Non-Pakistani” Single Vendor High Capex & Opex cost ZTE equipment in northern area (untapped market)
• • • Geared to Challenge No. 1 position Employer of Choice 3G part of their business case • • •
Geo/socio/economic factors Religious elements opposition Irrational behavior of industry (Zong)
WARID TELECOM Warid Pakistan launched its services in May 2005. Within 80 days of launch Warid Pakistan claims to have attracted more than 1 million users. According to Pakistan Telecommunication Authority, currently Warid Telecom has 16.15 million subscribers as of September 2008. It is ranked as the fourth largest operator in Pakistan. Warid Pakistan claims it has the largest "postpaid" subscriber base in Pakistan. On June 30th, 2007, Singapore Telecommunications Limited (SingTel) and Warid Telecom announced that they have entered into a definitive agreement subsequent to which SingTel will acquire a 30 per cent equity stake in Warid Telecom for an estimated $758 million — valuing the company at an enterprise value of $2.9 billion. Strengths
• • • • • • • Singtel – International partner Price perception Postpaid base Government links/influence Affinity partners (BAL) Owned Backbone Infra Ericsson Network infra – limited presence of Hauwai • • • • • •
Dis-organized team High Bad debts Weak distribution structure Low brand image Current network footprint Limited telecom experienced management
• • • • Blackberry to attract high end market Synergies with group companies
(BAL /Wateen / Wincom)
• • • • Market reaching maturity Socio/economic indicator PTA regulations HR (FnF) 37
Singtel buyout of major stake in company Brand revamping
Zong is the first International brand of China Mobile being launched in Pakistan. It is meant to empower and liberate the people of Pakistan in every nook and corner of the country. It will become a part of their hearts, their minds and bring about a change in their lives that every one desired but few thought would be possible. The core essence of ZONG is to allow people to communicate at will, without worrying about tariffs, network coverage, capacity issues or congestion. ZONG will be supported by ground breaking communications, trend setting customer service and an unmatched product offering which will redefine rules of the game and establish ZONG as a serious contender for the number one spot. Strengths
• • • • • China mobile financial strength Clear strategy to achieve market share Long term vision for profitability Decent brand China – Influence on government • • • • •
Perception of china “Cheap” Lack of international management experience Time of entry – 5th operator Issues with distribution structure Lack of Onnet volume
• • • • 3G makes sense for business Use of MVNO to add to revenues stream Buy out of operator “Insta” Youth market • • • • • •
Unable to meet customer expectation Market reaching maturity Socio/economic indicator Industry can strongly react PTA regulations Team development
3.2.2COMPETITORS 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, 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.
3.3 TECHNOLOGICAL ANALYSIS
Telecommunication sector in Pakistan The telecommunications sector at the global level is passing through rapid technological developments and an increasingly liberal policy environment. The same holds true for Pakistan where the sector has been exposed to reforms witnessing a significant expansion of both fixed and mobile networks and striking improvements in quality.
Pakistan may be categorized among those Asian economies which have partially privatized the state owned telecom sector while deferring the introduction of full scale competition to a future time. There exists a service competition rather than network competition. To inculcate and strengthen the concept of a market driven economy, the government of Pakistan established an independent regulator with the name of Pakistan Telecommunications Authority (PTA) in 1996. Afterwards a lot of achievements had been made in Pakistan telecom sector. 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. The growth of Pakistan telecom sector with the usage of technology can be seen in the sectors of • • • • • Mobile Sector Fixed Line Sector Wireless Local Loop Sector Payphone Services Internet Services
3.3.1Technological Problem Electricity – A technical disturbance Power crisis is leaving worst financial impacts on telecom sector like any other business domain of the country. With increasing competition, decaying service prices, investment pressure for 3G rollout, emergence of new players and growing operational expenses, power shortage in the country has fanned the fire in shaking telecom investors. An immediate and effective re-evaluation of business strategy should be carried out in order to lessen the effects of this dilemma. With considerable geographic spread and a populous rural track, telecom companies are working vigorously to expand their network reach to far flung areas of the country. The current business scenario, where the rise in cost of primary and uninterrupted power supply has amplified
enormously telecom companies must tie their hands together to share their infrastructure to minimize the expenses. Estimates, suggest that there are more than twenty thousand telecom towers in he country that worth millions of dollars. Market study predicts that at least 20% telecom towers are erected with no competitor's presence, which can be shared amongst the cellular operators. Telecom infrastructure sharing can not only shave the fat off an operator's capex but also opex costs as well, can be vital in coming days. All operators' under the umbrella of government must unite to gain the benefits of network sharing. 3.3.2Innovation The implementation of latest technology Pakistan Telecom has a lot more to achieve, the industry may further expand and lower tariffs can also be achieved. The present players have many chances to take lead, as consumers are more well-aware about their purchase decision concepts such as connectivity, coverage, voice quality and value added services and will only go for the best packages available. 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. Our Industry already has LL (Local Loop), WLL (Wireless Local Loop), LDI (Long distance and International), and ISP (Internet Service Provider) players and WiMax; 3G cellular systems are expected be a part of this Industry soon. Many actions have been started to make 3G services casual in society. The recent focus of the industry is the proliferation of broadband services at affordable rates throughout the nation. The latest technology of 3G mobile communications (mobile broadband) has been earmarked and PTA will soon be inviting applications for 3G spectrum auction. This technology will increase operating capacity and revenues by using HSPA technology; at the same time it will also provide superior and high speed broadband services, video telephony, internet, video streaming, high quality mobile TV and a number of value added
services. The players are focusing on mass advertisement, offering expanding coverage, customer services and unique and attractive packages. Recommendations 3G - the major force for broadband penetration. The following are some of the recommendation for the growth of 3G broadband market in Pakistan. 1. Government should provide tax holiday to the wireless operators for the implementation of 3G services in Pakistan. 2. The expected 3G license cost should be kept at a reasonable rate to spur growth in the broadband segment and should not be used as a vehicle for earning additional revenues for government. 3. USF should also encompass the broadband services and should help the operators in their expansion in semi urban areas and later on in the rural areas of Pakistan. 4. Subsidies should be given on the computers, Customer premises equipment and other hardware. Steps should be taken to encourage local manufacturing of such items. 5. Local content developers should be given special incentives and outside purchase of such content should be discouraged. 6. Regulation of pricing for maintaining businesses profitable 3G licensing Existing cellular industry is one of the most competitive industries and it is recommended that no new entrant is offered licenses in 2g or 3g market. As 3G is a natural evolution for GSM and the broadband market is its infancy with limited market size. It is recommended that (1 x 5 Mhz) spectrum is allocated to each operator and auction of remaining 5MHz at a higher price to interested operator for additional spectrum. This is help in developing the broadband market with significant coverage for 3g services. 3
R&D Fund The R&D fund is not being used for sectors benefit and it is recommended that either the R&D fund is abolished or reduced to a logical level with considering historical utilization with respect to growth in cellular industry. The scope and utilization of the R and D fund needs to focus on: 1. Establish of local manufacturing of handsets 2. Subsidy on alternate uses of energy and local development 3. Training and development of human resources for call centers and research and telecom education 4. Development of local content and software development.
4 DEPARTMENT WORK PERFORMED
I did my internship at Ufone in Strategic Planning & Program Management Office (PMO) Department. The department directly reports to the Chief Executive Officer (CEO) and major responsibilities of the department are as following: • • • • • • Defines the organization’s corporate goals and objectives. Collects and evaluates internal and external information that may affect the organization’s present and future state. Develops the organization’s long range (strategic) and shortrange (operating) plans Identification & development of Synergies Development & implementation of Strategic Initiatives at business level Overview the implementation of the Strategic plan & other initiatives through the PMO division.
Major Tasks The work I have done in the PMO department was related with analyzing the strategies of the company. The department – Strategic Planning And PMO is concerned with planning for the strategies, the future perspectives and managing the business operations.
4.1 Reports and Presentations
The activities I performed in the department were concerned with making reports and presentations. I had been assigned a task to make a report on the
Tariffs comparison of the network operators in telecom industry. Pricing comparison of the network operators in telecom industry. Coverage Comparison of the industry
While making different strategies in order to gain maximum market share, it is immensely important to examine the existing situation of the company to head towards the lead. So the internees were given such projects to provide the picture of market state according to their
understanding. The reports were not only to provide a minor help to the supervisors but also to aware the internees about the state of telecom industry in various aspects. The reports were not much complex and complicated. It was required to provide a 4 or 5 pages report within 5 days. 4.1.1Tariffs comparison of Industry My first report to the supervisors was, drawing the comparison between the network operators on the basis of their tariffs. Each network operator is providing a unique and attractive form of tariffs differentiated from each other. So I gathered the information from the websites of the network operators. I have also gained a great help from the annual reports of Pakistan Telecom Authority. UFONE 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 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. MOBILINK 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 offnet 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 For SMS , Mobilink has offered three different SMS packages (only from Mobilink to Mobilink) to its prepaid customers where it has offered unlimited SMSes for one month for Rs. 100, 500 SMS in 15 days for Rs. 50 and 100 SMSes for Rs. 15 in 7 days. Mobilink also introduced Club Red promot ion for its subscribers who wanted red carpet treatment. Under this offer, Jazz subscribers who crossed the monthly usage threshold of Rs. 1,000 got 50% discount on all calls to Mobilink numbers for the remaining days of the month. China Mobile launched three prepaid packages in April 2008. CM PAK 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. TELENOR 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 3
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 onnet 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 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 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, 4.1.2Pricing comparison of network Operators The second report I had submitted was to compare the pricing of the different network operators on the basis of Calls rates, Value Added services, Quality provided over Voice calls and SMS. I have made a Pricing Strategy Matrix also, in order to position all network operators.
The following table shows Prepay calling rates per minute at peak time for different mobile operators
We can see that Ufone has priced its calling rates of same, other and
Same Network Ufone Prepay Public Demand Mobilink Jazz Budget Jazz Easy Jazz Octane Jazz Ladies Telenor Djuice Talk Shawk Off Network Fixed Line Network International
1.80 2.10 2.40 2.50
1.98 2.50 2.50 2.50
1.98 2.50 2.50 2.50
23 23 23 23
Not available Not available
fixed line networks, somewhere between the highest and the lowest rates in the industry. However, as far as the rates for the international calls are concerned they are the lowest in the industry.
Pricing Versus Quality Below is the summary of the Quality of Service Survey conducted by PTA. Voice Call Ufone has a very high voice call service quality
Mobilink Ufone Telenor Network Accessibility (%) 99.8 99.4 99.1 Service Accessibility (%) 98.9 97.2 98.2 Call Completion Ratio (%) 97.2 95.9 93.3
in terms of network and service accessibility. However, it needs to improve its call completion ratio. SMS Ufone has one of the highest sms service accessibility.
Mobilink Ufone Telenor Service Accessibility (%) 100 99.9 100
Pricing for Value added Services The table below shows pricing for value added services of different mobile operators. These prices are inclusive of 21% GST. The prices highlighted in blue depict the lowest and the prices in red depict the maximum for each category in the market.
To Same Network To Other Network International SMS MMS Activation Charges (Rs.) MMS Per Incoming / Outgoing Message GPRS Per MB Balance Inquiry
1.00 1.50 5.00 Not Available
0.50 1.00 1.50 Free
1.00 1.00 5.00 Free
6.00 18.00 Free
5.00 15.00 0.50
5.00 15.00 Free
Pricing Strategies Matrix
Low Low QUALITY High
P R I C E S
I have placed the major network operators in the Pricing Stratgy Matrix on the basis of the pricing information. Also about Ufone calls rates, sms rates and quality we can conclude that: • • Ufone has priced its sms rates low and provides a high sms service quality to penetrate the market. Due to high quality of service Ufone has priced its call rates at cost plus premium price.
4.1.3Coverage comparison of the industry Another finding about the coverage of the mobile network operators in the industry was being assigned. I had completed this report on the basis of showing the graphical representation of market share by each company, the number of cell sites they have covered, number of franchises over all the country, and the population covered in the rural areas.
The market share of mobilink was the highest during the year 07-08. Telenor and Ufone showed the same maret share by 21%. Warid had a market share of 18% and Zong had 4%.
Franchises: The Grsph is showing the number of stores or farnchises existed by each company. The major stores are of Mobilink followed by Ufone.
Cell Sites During the year 2007-2008, the cell sites by each operator is shown in the graph
Coverage The population covered in the rural areas concerning the cities, towns and villages are shown in the graph. The value is in thousand (000).
4.2 Industry Issues
With annual growth around 100% for some years now, the mobile telephone market in Pakistan has been experiencing a period of strong and sustained development. However, Pakistan is suffering important economic turbulences which will have a direct impact on foreign operators in the country. Some of the reasons are:
The decline in Rupee value against the US Dollar, the decrease in the interconnect charges and lower priced tariffs have resulted in an overall decrease of ARPU in US Dollar terms. The ongoing economic and political turmoil along with the worsening of security conditions in Pakistan have caused an increased outflow of capital from the country, causing the Rupee value to decline a further 13% against US Dollar in the third quarter. In light of the worsening economic conditions and the lack of prudent policies, the international rating agencies like S&P and Moody’s have recently downgraded Pakistan’s sovereign rating.
In the period of 2007-2008 the mobile sector has been characterized by:
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Falling ARPU Steady subscriber and revenue growth although a slight decrease in growth has been appreciated from the previous year. Intense competition by new international players coming to the market recently. Network deployment in the regions to increase addressable market as a measure against falling ARPUs.
Mobile services, despite high costs, still grow rapidly. Subscriber numbers increased from 68,000 in 1996 to 3.3 million by end-2003; since then the subscriber base has surged to reach 80 million in early 2007 and surpass 95 million in 2008. Penetration had reached the 58% mark, but judging by the commercial activity in the market there was still room for expansion. While progress has been made in the regulatory area, some rigidity in policies had been slowing growth.
5 IDENTIFICATION OF MAIN PROBLEMS
The main problem in the current era faced by the telecom industry in Pakistan is increased taxes imposed by government. The companies existing in telecom sector are facing major decline due to the fact. In the budget, government had 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 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.
5.1 Activation Tax
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.
5.2 Withholding tax
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
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 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 theyear 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.
5.4 Devaluation of Currency
Devaluation 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. Devaluation 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.
I observed a trend of aggressive marketing and advertisement by the mobile operators in Pakistan. They proudly announce 50 paisa, 3 paisa, 1 paisa call rates. Trying to one-up other competitors, the advertisements emphasize the lowest possible rate to grab the consumer attention. In reality the low rates being advertised come up with many conditions. To figure it out one has to read the fine print carefully that usually marked with * (asterisk). I think this is unfair to the consumers and we need to criticize this trend which some may characterize as deceptive marketing. Pakistan has remarkable growth in telecommunication industry. It is found that 75% population of Pakistan has mobile phones and the counting is increasing day by day. PTA recorded customers are about 88 million. This is huge craze in mobile industry. Since I am working on this project, I found some irregularities:
6.1 Network Connectivity Problem
People are worried about cellular service they often complaint that cellular operators are not willing to enhance their services. Caller feels disturbance, busy network, and unauthorized call ending.
6.2 Dirty SMS
Cellular operators provide bundle SMS / MMS offers which results huge load on networks. Bundle offers also cause dirty and unethical jokes and SMS.
6.3 Rough/Unreal Ideas in Advertising
Many cellular service companies are using rough ideas for TV advertisement. Specially prepaid products are not belonging to realities. The imagination is not attractive and not belongs to human.
6.4 Too Much Advertisement
Cellular companies are having bombardment of advertisement on TV channels. People are fading up with this type of unnecessary advertisements.
6.5 Advertising Budget
Companies are spending Millions dollars for in favor of advertising but they don’t pay attention for the improvement in network or service. Although Ufone’s Management has signed Rupees 550 million contract to spend its operation in interior areas and villages of Pakistan but there is still more amount required to provide better service for customers.
7 RECOMMENDATIONS 7.1 Installation of equipment with professional engineers
Cellular companies must understand the worth of their presence in the market. If there is a growth, there is immense competition. Cellular companies should pay attention on the service which is providing to customers. They just spend on their network growth but don’t realize the value of service. Advanced Technological equipment should be installed with professional engineers this will benefit the consumers.
7.2 Call Rates & SMS Bundle offer
Companies should minimize the call rates instead of SMS rates. Low SMS rates causing dirty and non-sense jokes which is building unsecured society. Adults are wasting their time in sending and receiving unnecessary messages on mobile phone.
7.3 Attractive Advertising
After having comments on advertising campaigns with different living standards, I observed that companies are not efficient in advertising. Mostly cellular advertisers are using rough and unreal ideas which are not changing consumer’s perception towards any cellular service. Marketers should convince in polite way instead of Bhangra style. Companies should implement the effective advertising strategies which affect the consumer and easily deliver message.
7.4 Control on Advertising and Budget
Too much advertising lost its importance; companies should control the spots of advertising. They should avoid too much repetition of ad. People faded up and don’t want to watch ads. They should educate the people and give proper complete message against call rates and other value added services. Companies spend much money on advertising campaigns; they should control it and pay attention on service.
Telecom industry is most growing industry of Pakistan still huge investment required for coverage. The market also has strong competition after the entrance of China Mobile Company as player. Competitors are hiring professionals to entertain the consumer which is resulting technological implementation and value added services. Ufone is a place where one can live his dreams and pursue a career that reflects his skills and passions. People in Ufone give flexibility for change, the opportunity to learn, and providing career options with endless possibilities The managers at Ufone believes that all employees have a right to offer input and be involved in helping their organization grow. All departments are working together and they wants to create a work environment in which employees can improve their minds, continuously learn, gain professional growth and feel inspired by similarly motivated individuals. The Ufone takes pride in providing the best possible working environment. They take a constant interest in ones progress by conducting evaluations and offering the support and resources one needs. I reveal some complications in “Findings”. It has been analyzed that people are concerned about call rates they do not prefer any particular company. Consumer searches good service with lowest call rates, although companies are minimizing call rates this will result more growth in the market and to meet the customer needs by satisfying them.
The information has been gathered through the various sources including
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Ufone – Department of Strategic Planning Pakistan Telecommunication Authority – Annual Reports 2007-2008 www.ufone.com www.telecompk.net www.pta.gov.pk. www.propakistani.com www.financialdaily.com