Telenor Pakistan – Case Study

Table of Contents
Table of Contents........................................................................................................................................2
As member of the board of Telenor PK (TP) how much of a growth story are you hoping to build? Is
the current progress not satisfactory, if so, why?......................................................................................3
How much additional profits would you like to see as a board member/director? Make assumptions as
necessary....................................................................................................................................................3
Are financial services a good fit for TP?.....................................................................................................4
References..................................................................................................................................................5
As member of the board of Telenor PK (TP) how
much of a growth story are you hoping to build? Is
the current progress not satisfactory, if so, why?
Ans. Telenor is a big name in the market, where all mobile network users are aware of its brand.
Moreover, Telenor has achieved several milestones such as the initiation of the easy load which has
contributed significantly towards the growth story of the company. However, the current progress
may not be deemed satisfactory as there is a lot of potential for the company to grow based upon
the resources it possesses. This can be seen by the comparison of TP’s Average Revenue per Unit
(ARPU) by Telenor’s ARPU in other Asian & European countries. While customers were increasing for
the firm, not only the actual revenue figures were way lesser than estimated, the capital
expenditure was also higher than expected – making TP’s growth going into the negatives which
makes the current progress unsatisfactory and strategies must be built in order to build it. Since
there are not much opportunities left in the telecommunications market, case in point being: while
the market for cellular network is rising on an increased rate, the market is highly dominated by
PTCL where 90% of customers use PTCL as their service provider. While TP must focus on the
telecommunications market in order to build a greater growth story – it must diversify in order to
build more customers, revenues and a much larger growth story which cannot be gained through
the services currently offered.

As member of the board of TP, I would expect a huge growth story – both in respects with the
network itself and its cellular services and especially in terms of expanding into the financial
services. If the company expands successfully into financial services, it will expect to have grown in
double or triples amounts as this will be a whole new sector of services offered by one company.
With the plan of diversifying into financial services, TP could offer the Pakistani population a much
wider access into seeking financial services as as for right now, only about 14% of the population
seek them. Providing a greater access will not only cause TP the opportunity to gain more
customers, but also will give the company the image of bringing more accessibility into the country
and a big contributor towards greater standard of living amongst the people and the country’s
economic development. Moreover, it will be the first promoter of internet banking – which will give
the company a differentiating factor and a title which it can take pride in for the following years.
Both of these will help the company to build a brand image so strong and build a growth story such
that they become one of the leading service provider in the country. While this was talking about in
perspective of the customers, expanding will also help TP bring in increased revenues and profits to
invest back into the company or give back to its shareholders. [ CITATION She14 \l 1033 ]

How much additional profits would you like to see

as a board member/director? Make assumptions as
necessary.
Ans. As the board member, it is vital that the company is expected to make huge profits as it will
diversify into a whole new market which will make them gain a greater customer base and access to
much more services. This will allow the company to diversify its costs and engage in diverse
economies of scale which will allow it earn more profits.
 As member of the board, getting into a whole new industry will mean that there will be additional
heavy costs which will be borne by the company first. The costs of partnership, costs of acquisitions
if that happens. Moreover, hiring more employees or hiring more locations will also have additional
fixed costs. These costs will not immediately breakeven and will take time before they turn into
profits.

Since one of the most profit seeking industry in the world is indeed the financial services sector, TP
will have a huge profit advantage when it moves into this sector. The competitive advantage of
offering a new service available to more customers which cause it to have increased customers
which will allow it make more revenues from them –increasing the profitability by a greater margin.

All of these factors tell that TP is set to make groundbreaking profits which can be assumed to be a
100% more than what they make right now. This assumption is made that while it will take time
before the company can breakeven on the costs of expansion, once it starts making profits, the
newer services, the interests, the customer base and the wide retail network will allow it to make
greater profits of more than 100% which it desperately needs in order to fund the losses and the
decreased profitability it has seen in the past few years. [ CITATION She14 \l 1033 ]

Are financial services a good fit for TP?

Ans. Telenor Pakistan is a company at a good position in the country. It is well known for its services
& is known to be credible. However, its market is being increasingly saturated. In order to remain
relevant and competitive in the industry, TP must diversify and one of the best markets to diversify
into right now seems to the financial services as it is both the most profitable market and also the
best telecommunications can pair up with.

Financial services will be a good fit for TP as this is one of the market no one has tapped into yet. As
mentioned in the case as well, it will give TP the advantage of being the first one to recognize the
need and build upon providing that need. It will give them the same competitive advantage as it did
with the easy load. It will give them increased customers who will remain loyal ever after other
companies follow up on the idea later which will cause them to always have customers for their
services – giving them an increased advantage in the field.

Moreover, upon revaluation of the assets of TP, it seems that TP is well fit to be in the financial
services as it has a vast network of retailers in the rural areas, a strong customer base, and strong
image with customers and mutual-trust relationship with its retailers. All of this makes TP have a
greater connection and availability to customers to provide the new services easily and without any
additional heavy costs, an already built customer relationship which will ensure its sales, and an
already existing relationship with retailers which will allow it a competitive edge in the market when
retailers prefer TP to any other brand in the market making TP the only brand which is widely &
readily available throughout the market. While Mobilink is offering limited internet banking, it is still
way far behind before it can make a mark and continue with TP’s idea. Moreover, it is to be noted
that TP must move forward as soon as it can in order to build upon this advantage.

Perhaps the most valuable resource that TP may have is its human resource capital. With employees
and directors such as Naevdal & Bjaerum, TP was able to recognize and analyze newer opportunities
and was able to quickly build upon them. With them leading the team, TP can build a team which
 can propose and implement what’s best for the company and what is best for the customers to
become a good fit in the industry.

With the partnership model built with the acquisition or partnership with Tameer Microfinance Bank
Limited and other banks the company has talked to, if TP partners up or acquires one of the banks, it
will have enough relevant human resource & intellectual capital in order to run the financial industry
deemed fit. Since TP will be giving services connected with the telecommunications market, it will
give them an even larger competitive advantage and will make them an even greater fit. However, it
should be noted that the success or the revenues TP will be able to generate from diversifying will
largely dependent upon the type of partnership agreed upon by TP. While it is also mentioned in the
case, it is vital that the partnership selected is that benefits TP the most & not the bank itself.
[ CITATION She14 \l 1033 ]

References
Sheikh, S., & Hassan, S. Z. (2014). Telenor (A): From Cellular Networks to Financial Services. North
American Case Research Association, Inc.