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DOWNFALL OF Murtaza Shabbir MOBILINK

BT-08-14

BT-08-47

Ahmad Hannan “PRINCIPLES OF BT-08-65 MANAGEMENT”

SUBMITTED TO:

2 Downfall of Mobilink

Preface
Mobilink Pakistan, premium cellular company claims to have 30 million subscribers nationwide; the fact is Mobilink is the largest cellular company in Pakistan. Mobilink being the pioneers of introducing cellular networks in Pakistan established themselves as the major cellular company of Pakistan while covering almost every city of Pakistan. According to PTA new mobile subscriber’s statistics Mobilink, Pakistan largest cellular service, continues its downfall by losing 476,521 customers. The report has tried to illustrate and judge some of major reasons for downfall. This report contains information about factors and some strong competitive forces Moblink faced which resulted in crisis. Mobilink is major cellular company and will stand in first place many years to come. With professional approach and highly skilled staff behind Mobilink is the premier choice for subscribers nationwide. The only problem I see with Mobilink is the call rates which in my point of view are somewhat high. As the competition is growing I hope the rates will be cut down to attract more subscribers.

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Acknowledgement
“To Him belongs the dimension of the Heavens and the earth, it is He who gives Life and death and He has power over all things.” (Al-Quran)
All acclamation to Allah who has empowered and enabled us to accomplish the task successfully. First of all we would like to thank our Allah Almighty who really helps us in every problem during the project. We would like to express our sincere and humble gratitude to Almighty whose Blessings, help and guidance has been a real source of all our achievements in our life. Under the supervision of respected Madam QuratulAin Beenish, I worked as a group leader with my co-workers: We interviewed Mobilink’s Managers, Employees, Corporate and Retail Customers and customers which once used Mobilink, visited PTA’s results to get to know what are some of reasons for such a storming downfall Mobilink faced. I would like to thank respected Mr. Bilal Chaudhry, ZRO [Zonal Retial Officer] Multan for his deep concern and help for our topic. Moreover, I would like to thank all of Mobilink’s Crew for their help in all possible ways.

 Mobilink
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 Mission statement  Values Table

Of Contents

 History Of Mobilink  PTA  Mobilink  Orascom Telecom  Network  Organogram  Products of Mobilink  Growth Share Matrix  Downfall Of Mobilink  What is Downfall  Literature review  Public Voices

Major Downfall Reasons

SWOT Analysis Of Moblink

 Conclusion  Bibliography  Refrences  Anextures

5 Downfall of Mobilink

Mobilink
MISSION STATEMENT
“To be the unmatchable mobile system of Communications in Pakistan this provides the best value to its customers, employees, business partners and Shareholders.”

Mobilink's Vision
“To be the leading telecommunication services provider in Pakistan by offering innovative communication solutions of our customers while exceeding shareholder value and employee expectations”

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Values
Total Customer Satisfaction:
Customers are at the heart of our success. They have placed their trust and confidence in us. In return, we strive to anticipate their needs and deliver service, quality and value beyond their expectations.

Business Excellence
We strive for excellence in all that we do. We aspire to the highest standards and raise the bar for ourselves everyday. This commitment to delivering worldclass quality translates into unmatched service and value for our customers and all stakeholders.

Trust & Integrity:
At Mobilink, we take pride in practicing the highest ethical standards in an open and honest environment, and by honoring our commitments. We take personal responsibility for our actions, and treat everyone fairly, and with trust and respect.

Respect for People:
Our relationships drive our business. We respect and esteem our employees and all stakeholders. We believe in teamwork, empowerment and honor.

Corporate Social Responsibility:
As the market leader, we recognize and fulfill our responsibility towards our country and the environment we operate in. We contribute to worthy causes and are dedicated to the development and progress of the societ and y.

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Pakistan Telecommunication Authority
The telecom sector of Pakistan has seen phenomenal growth over the past few years. According to the Pakistan Telecommunication Authority (PTA), the total mobile phone subscribers in 2007 were more than 63 million, a growth of more than80% from the previous years. During 200607, the mobile sector generated Rs 133 billion in revenues, an increase of 48% from the previous years and contributed Rs 63 billion to the national exchequer in terms of taxes and regulatory fees. The telecom sector contributed 2% to the GDP in 2005-06 and received more than $1.8 billion in foreign direct investment (FDI) in 2006-07 , which is 35.6% of the total FDI in that period. Furthermore, the telecom sector has also created over one million in jobs, since its deregulation, making Pakistan one of the world’s fastest growing telecom markets. The Pakistan Telecommunication Ordinance 1994 established the primary regulatory framework for the telecommunication industry including the establishment of an authority. Thereafter, Telecommunication (Re Organization) Act no XVII was promulgated in 1996 that aimed to reorganize the telecom sector of Pakistan. Under Telecom Reorganization Act 1996, Pakistan Telecommunication Authority (PTA) was established in January 1997 to regulate the establishment, operation and maintenance of telecommunication systems, and the provision of telecom services. The telecom sector was deregulated in 2003.

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 28 million and growing. The first cellular service provider to operate on a 100% digital GSM technology in Pakistan that also provides state-of-the-art communication solutions to its customers.

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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.

Orascom telecom
Mobilink launched its operations in August 1994 after it was founded in 1990 as a joint venture between Motorola and the Saif Group and awarded a license for mobile telecommunication system and services in July 1992. Later on in April 2000, Orascom Telecom bought 38.6% stake in PMCL, which it later in February 2001 increased to 68.69% by purchasing Motorola’s share in PMCL and Becoming the major shareholder of the company. In April 2001, Orascom Telecom took over management control of the company. As of December 31st, 2007, Orascom Telecom indirectly owns 100% of the share capital of Mobilink through direct stakes held by wholly owned subsidiaries of OTH. By December 2007, Mobilink had achieved 39.8% in market share, making it the market leader in the mobile sector of Pakistan and had a customer base of more than 32 million by July 2008.

Network
Mobilink was awarded a 15-year license in July 1992 to establish and operate a Digital cellular telecommunication system using the GSM 900 standard and to offer telecommunication services in Pakistan. Mobilink has been growing its network, providing 2G, 2.5G, GPRS and EDGE compatibility. Mobilink was the

9 Downfall of Mobilink

first operator to start rolling out the Enhanced Data Rates for Global Evolution (”EDGE”) in Pakistan.

Years of Business Cities Investment Switches Cell Sites Optical Cable Deployment Switch Types Radio Base Stations Intelligent Networks Microwave Equipment Operating Frequency SMSC

13 7000+ USD 1 Billion+ 66 6,300 5,000 KM Nokia-Siemens, Alcatel, Huawei Motorola and Alcatel Siemens NEC and Alcatel 900/1800 MHz Logica CMG

In addition, Mobilink also launched its BlackBerry service in December 2005 through its GPRS platform. Mobilink is committed in providing the best network to their customers, which in recent times has expanded to more than 9000 cities and reaches over 66% of the total population and 99% of the urban population as of December 31st, 20076.

Organogram

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President and CEO Rashid Khan
Chief Information Officer
Tariq Rashid

Vice President Human Resources, Administration & Security Ali Raza Mehdi

Vice President Sales Jahanzeb Taj

Vice President Marketing Bilal Munir Sheikh

Vice President Customer Care Irfan Akram

Vice President & Head of Broadband Business Division. Mustafa Peracha Chief Technical Officer Ramy Reyad Kamel

Vice President Corporate Affairs Agha Qasim

Vice President/ Chief Strategy Officer Mr. Aamir

Products

11 Downfall of Mobilink

1.Jazz Prepaid 2.Indigo Postpaid 3.Blackberry Services
They offer tariff plans that are exclusively designed to cater to the communication needs of a diverse group of people, taking into account occasional users to businessmen. To achieve this objective, they offer both postpaid (Indigo) and the prepaid (JAZZ) services to their customers. Jazz is an amazing prepaid service that allows freedom from monthly bills and gives complete control over the customer’s cellular expenditure. The user can decide in advance when and how much he wants to spend. He can load a scratch card whenever he wants to and start talking. Jazz is simple, easy and loads of fun. not only Indigo and jazz mobilink have 13 more products given below,

1.Mobilink Indigo 3.Mobilink BlackBerry 5.Mobilink WiMAX 7.Mobilink Game ON 9.Conference Bridge 11.PIA Reservations

2. Mobilink Jazz 4.Mobilink PCO 6.Mobilink TV 8.Jazz Cricket SIM 10.PSO Cards 12.Stock Watch

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13.Fax Mail 15.SMS Advertiser

14.Corporate SMS

VALUE ADDED SERVICES
In addition to providing advanced voice communication services, they also offer a number of value added services to their valued subscribers.

1. GPRS 3.SMS Messaging 5.Chat Services 7. Power Tools 9.Info Services 11.On Call Services

2.Mobilink Mustt Services 4.Power Tools 6.Dedication Services 8.Mail Services 10. IVR Ring tones/Logos 12.Missed Call Alerts

Strategic Business Units of Mobilink

13 Downfall of Mobilink

• Jazz One • Jazz Budget • Jazz Ladies First • Jazz Easy • Jazz Octane • Mobilink Indigo • Mobilink PCO

Classification of SBUs according to growth-share matrix:
CASH COW
•Jazz Ladies First •Mobilink Indigo •Jazz Budget

STAR

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•Jazz One

QUESTION MARK
•Jazz Easy •Mobilink PCO

DOG
•Jazz Octane

Downfall of mobilink
What is downfall?
“Failure that results in a loss of reputation”
“a sudden decline in strength or number or importance;”
www.wordnet.com

“A sudden loss of wealth, rank, reputation, or happiness; ruin”
Merriam Webster

15 Downfall of Mobilink

“Something that causes severe impairment, as of one's health, fortune, honor, or hopes”
www.dictionary.com

Literature review effect of economic recession on Pakistan telecom
babbar bhatti www.telecompk.n et
In pakistan the inflation is around 25% and prices for necessities of life have skyrocketed. Real gdp growth has fallen to 3.6%. Naturally telecom has taken a hit. In the past few years consumption was encouraged and that resulted in more consumer spending on phones (draining the foreign exchange) and on voice and data. More first time users of mobile services signed up. Now with the

16 Downfall of Mobilink

rough patch in economy, government has raised taxes on handsets (to discourage import) and the services (to squeeze more revenue). Even in these times the growth and new services potential remains compelling because: 1. Over 100 million population are less than 30 year of age and they are highly likely to use tecnology and communication services 2. Incomes are rising among certain sectors including middle income 3. Business and investment friendly policies - overall environment determined by political and security situation 4. Regulator (PTA) continues to engage in reforms and is executing well The conclusion is that if the politics and security situation does not worsen, Pakistan should do fine. Here are a few of the recent announcements from the global telecom media. Other than the voluntary separation plans from PTCL, we have not seen large scale work force reduction in Pakistan.
• • • • • • • •

AT&T to Slash Work Force Blackberry Sign-Ups Miss Target Global Mobile-Phone Sales to Fall Nokia Cuts Mobile Phone Mkt Forecasts Again Gartner: Smartphone Sales Slowdown To Continue Nortel cuts jobs and lowers forecast BT British Telecom Lay off Job Cut: fires 10000 Telecom Italia to Cut 4,000 Jobs

Foreign direct investment in telecom sector of Pakistan drops
Zulqernain tahir, Oct 22, 2008

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Dawn news
According to the third quarterly report of the Pakistan Telecommunication Authority (PTA), the total FDI in the sector was $1,824.3 million in 2007 which dropped to $1,438.6 million in 2008. The authority maintains that main reason behind the decline is that cellular operators have already invested huge amounts to roll out the infrastructure, and, secondly, the local financial market has enabled them (operators) to generate sources locally. However, the operators are of the view that 'current uncertain situation' has played a major role in keeping the FDI at bay. It is learnt that major investment by the leading operators may not resume even next year owing to prevailing economic and political uncertainty. On the other hand, the PTA report reveals that subscribers' growth rate has also registered a decrease of 61 per cent this year as compared to the corresponding period last year. By June last year, total subscribers were 63 million and the number has risen to 89.5 million by Aug this year. The number of PTCL subscribers has also reduced from 4.6 million to 4.4 million this year, the report says. By August this year, Mobilink has a subscriber-base of 31.5 million, Ufone 18.6, Telenor 18.3 million, Warid 15.9, Zong 4.8 million and Instaphone 321,134. The reason of decline in the subscriber-base is said to be imposition of high taxes. A mobile user has to pay almost 31 per cent in terms of taxes/service charges which is at least 14 per cent higher than anywhere in the world. Now every customer has to pay Rs5 more in terms of service charges to the mobile phone company on topping every recharge of Rs100. The stiff competition among cellular companies has compelled them to lower their call rates with an aim to capture subscribers' market, which is also resulting in decrease in their profitability. The PTA report further reveals that teledensity of mobile phones has only reached 55 per cent in the country, an increase of only 11 per cent to that of registered in 2007. It belies the claim of those even in the PTA that 'around 90' per cent of the total population of the country now has cell phone coverage.

Public voices about

downfall

18 Downfall of Mobilink

“Mobilink, the market leader, saw a drop in mobile subscriber base which fell from 28.315 million to 28.116 million during January-February 2009.”[5] “Not only sales and number of SIMs are a part of strategic failure of Mobilink but also its policies including highly hiked operational expenses, detested packages, deplorable services and deceptive marketing practices”[6] “Mobilink, the Pakistani incumbent, has lost more than 2,000,000 subscribers driven by interrupted service and blocking of illegal SIM by Pakistan Telecommunication Authority (PTA). Mobilink’s subscriber base now slided from 32 million to 30 million. It is seen that out of the 20, 00,000 subscribers, 7,50,000 have ported their numbers to other subscribers and the rest 12,50,000 have been blocked by PTA after they were identified as illegal SIMs. Mobilink has been facing such problems due to poor quality of services. On the financial front the operator is going through a crisis bringing the jobs of many on stake and has been fined in past with millions of rupees by PTA for interrupted service.The subscribers with Mobilink are seen to be using number portability more than any other Pakitani operator.”[7] “Statement from the China Mobile Chairman that China Mobile sees their Pakistan operations as a valuable experience for its subsequent international ventures, will surely put the existing big boys of cellular services in Pakistan like Mobilink and Ufone on high-alert and may be give them sleepless nights.”[8]

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“Mobilink, once the market leader in innovation and new ideas has not been able to find a single new idea for its WiMAX services. They are now "stealing" ideas from their biggest rivals, Wateen. The products and services they are working on and will be offering soon are: 1. Online gaming service (I wonder how they are going to put up so many servers) 2. IP Video Surveillance 3. IPTV 4. VAS Portal (with music, movies and stuff) 5. Video Telephony”[9] “Mobilink forcly terminated their one thousand employees in all over Pakistan from administration and security department without any notice. Mobilink face financial crises.”[10]

20 Downfall of Mobilink

Major downfall reasons
Affordability versus availability: Higher operational Cost
Mobilink started with owned technological resources which increased operational cost. The higher cost started acting as downfall with the increased competition and availability of cheaper networks. Mobilink offered high incentives for its employees as well as high amount towards advertisement campaign and brand imagery by focusing on uptodated service centers and head office interiors. They started with their own network lines throughout covered areas. Higher operational cost resulted in higher amount to be paid from lower end customer. Major customer share is now related to Middle and lower class of Pakistan. Due to increased economical recession even corporate sector is turning towards affordability.

Detested packages: Loss of reliability
Mobilink offered a packaged named JAZZ LADIES FIRST. The package consisted of lower rates of Rs. 5+ GST per hour 11pm-6am. This package was innovation in Telecom sector and attracted a huge amount of customers. As people started using Jazz, the mobilink’s infrastructure was not capable enough to carry out such a huge load once the clock ticked 11 pm. The whole corporate sector faced this problem with greater intensity. Mobilink took quite a long time to get back to improved infrastructure but it lost Customer’s satisfaction Level.

21 Downfall of Mobilink

Deceptive marketing practices: Lack of quick response
With the arrival of Zong, A china Mobile Company, the competitors in market [Ufone, warid, Telenor] focused on introducing lower rates for Smart Messaging Service, but mobilink did’nt put forward any innovative package for the particular service to compete in market. SMS is now a craze for a major customer group especially teen agers. Mobilink sat back and did’nt put forward any special competiting package for a long period of time. Meanwhile customers moved toward cheaper packages.

Mobile Number portability: Blockage of illegal SIM use
Pakistan telecommunication Authority, PTA, blocked usage of illegal SIM’s. Now if you buy a new SIM, you have to dial 789 and the operator may ask u about your Identity Card No., ID card no. connects operatot to the database of NADRA. Then operator will ask you few questions about your identity for example your Mother’s name etc. Once you have confirmed your identity you are allowed to subscribe to your subscriber network. By the launch of MNP, a large number of subscriber base who were illegally using SIM’s was destroyed. According to NAWA e WAQT 3 Million people in Pakistan are still using Illegal SIM’s.

Swot analysis of mobilink

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Strengths:
• •

• • • • • •

Considered very strong and reliable Captured most of the potential customers (28 million and growing) Covering over 10,000 cities, towns and villages across the Pakistan[10] First operator to introduce IR for the people of Pakistan Only cellular service in Pakistan to provide coverage on the M2 motorway. A very strong brand image Highest market share not only in terms of number of subscribers but also in terms of revenue. Mobilink has signed bilateral roaming agreements with 50 operators around the world to have true roaming service operational in over 42 countries of the world. In order to facilitate its international Roaming subscribers traveling to USA and Canada, Mobilink is offering Motorola Timeport Triband (TT) handsets on rental basis. These sets are available at all Mobilink's Customer Service centers. Mobilink's short message service center allows Vehicle Tracking and Fleet (VTF) Management services. • Large number of corporate customers. • Economy of scale. • Mobilink and Muslim Commercial Bank have made a combined effort in order to maximize the ease and the satisfaction of their respective customers by offering them all banking services from their very own mobile handset. Only company offering corporate packages

23 Downfall of Mobilink

Weakness of mobilink
• Currently providing not good quality service because of changing their network from 900 MHz to 1800 MHz. • • •

Fewer advertisements now days. Most expensive telecom company both in call rates and SMS Engineering department of Mobilink is not that well competent as compared to its new competitors Customer retention Side is weak due to expensive packages

Opportunities:
Can expand its networks in the uncovered areas Services in the future can be  Telephone  Wireless  Calling Cards Mobile Phone Banking Before start of new companies can target as many new customers as they can. Can lower prices to make business difficult for new companies

• • •

Threats:
 New market players are coming in near future. • New companies can offer packages for corporate customers in better way. • Wireless local loop service providers too targeting areas

24 Downfall of Mobilink

• •

which are less developed. • Current price war may reach at a position where only brand names survive. • Due to expensive quality of service now a days customers can shift to other companies. Employee retention is also issue because mobilink fired 1000 employees in October 2008. Loss of loyal customer

Conclusion

25 Downfall of Mobilink

Mobilink still has power and Brand Image as well as corporate Impression. It still needs a long time period and recession to get beaten by competing companies. Mobilink is major cellular company and will stand in first place many
years to come. With professional approach and highly skilled staff behind Mobilink is the premier choice for subscribers nationwide.

References

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PTA, Pakistan Telecommunication Authority [www.pta.gov.pk]
1. http://www.zenblog.co.cc/2008/11/mobilink-contineous-its-downfall-

warid-takes-top-level/ 2. Daily Times, July 27,2007.
3. www.wirelessfederation.com/news 4. www.flare.com.pk 5. www.wirelessfederation.com

www.techturtle.com

Bibliography
MNP Moibile Number portability PTA Pakistan telecommunication Authority

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