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BAHRIA INSTITUTE OF MANAGEMENT & COMPUTER

SCIENCES

INTERNSHIP REPORT

AYESHA HASANRoll No:

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TABLE OF CONTENTS
1 INTRODUCTION..................................... ............................4
1.1 COMPANY PROFILE................................................................4
2 COMPANY ANALYSIS................................... ........................6
2.1 OPERATIONAL ANALYSIS............................6
2.2 HUMAN RESOURCE ANALYSIS...................14
2.3 MARKETING ANALYSIS.............................17
3 ENVIRONMENTAL ANALYSIS.....................27
3.1 INDUSTRY AND MARKET ANALYSIS............27
3.2 COMPETITOR ANALYSIS............................35
3.3 TECHNOLOGICAL ANALYSIS......................40
4 DEPARTMENT WORK PERFORMED ...........45
4.1 Reports and Presentations.......................45
4.2 Industry Issues...................................... ..53
5 IDENTIFICATION OF MAIN PROBLEMS.......55
EXECUTIVE 5.1 Activation Tax.........................................55
5.2 Withholding tax..................................... ..55
SUMMARY 5.3 Investment.............................................56
5.4 Devaluation of Currency .........................56
6 FINDINGS............................................. ..58
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 RECOMMENDATIONS...............................60
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
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.

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1 INTRODUCTION

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.

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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 sub-
heads 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.

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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 for proficient 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

o 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

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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

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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.

o 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

o Implementation of Strategic Plans

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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:

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• 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.

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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
Within Ufone To Other
Tariff (Rs.) Per To PTCL
Community Networks*
Minute
Outgoing Call
rates / Peak
2.50/- 2.50/- 2.50/-
Hours
(7am - 10pm)

Outgoing Call
rates / Off Peak 1.50/- 2.50/- 2.50/-
(10pm -7am
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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


Postp
Postpa Postpa Postpa
Ufone postpay Tariff (Rs.) ay
y ZLR y Ease y Value
Extra
Monthly Line Rent 0 199 399 999
Outgoing Call Charges (per 30 seconds)
Ufone to Ufone 0.90 0.60 0.50 0.40
Ufone to Other Mobile
1.15 1.10 1.10 0.90
Operators
Ufone to PTCL & WLL
1.00 0.80 0.70 0.60
Network
SMS Charges
Ufone to Ufone 0.50 0.50 0.50 0.50
Ufone to Other Mobile
1 1 1 1
Operators
Free offers
Free Minutes 0 200 400 1000
Free SMS 0 25 50 100
Security Deposit
Local & Nationwide 750 1,000 1,500 2,500
International Dialing 2,500 2,500 3,000 5,000
15,00
International Roaming 15,000 15,000 15,000
0

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.

• Electronic media

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

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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.

23 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

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• 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 2007-
08 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

27 3
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.

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• 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

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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 and
Penetration
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.

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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-of-
the-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) • Weakness
Most exposed to loss of customers
• Largest Network Coverage • Weak customer care
• Strong Brand (Jazz) • Billing issues & hidden charges
• High %age of high end • Technical issues due to mix of old &
customers new infrastructure and multiple
• Low network dependency on 3rd vendors
Party (own backhaul fibre & LDI) • Slow process due to OT
• On net advantage • Internal bureaucracy
• Can charge price premium • Unsustainable opex structure
• Strong media presence • 3
• Financial muscle through strong 35
top line
• Experienced & dynamic team
Opportunities Threats

Opportunities Threats

• Extensive rural market presence • Industry reaching maturity


• Geared for 3G • Higher probability of churn in the
(Substantial high end customer base) industry
• Customer loyalty low in the
• Presence in international financial
industry
market
(No hurdle in International borrowing)
• MNP major loser in industry
• Price war can hit more
• Able to hire cream resources from
mkt
• Use of MVNO to increase revenue
• New Revenue streams
(Mobile advertisements/ mobile
commerce etc.)

TELENOR

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 Weakness
• Brand consistency • Top management “Non-Pakistani”
• Strong retail network • Single Vendor
• Employee loyalty (HR) • High Capex & Opex cost
• Quick reaction to competitors • ZTE equipment in northern area
• 100% equity financed operation (untapped market)
• Long term vision for profitability
• Strong & effective marketing
• Strong vendors (Nokia siemens)
• Maintaining substantial growth
in revenue
Opportunities Threats

Opportunities Threats

• Geared to Challenge No. 1 • Geo/socio/economic factors


position • Religious elements opposition
• Employer of Choice • Irrational behavior of industry (Zong)
• 3G part of their business case

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 "post-
paid" 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 Weakness

• Singtel – International partner • Dis-organized team


• Price perception • High Bad debts
• Postpaid base • Weak distribution structure
• Government links/influence • Low brand image
• Affinity partners (BAL) • Current network footprint
• Owned Backbone Infra • Limited telecom experienced
• Ericsson Network infra – limited management
presence of Hauwai

Opportunities Threats
• Blackberry to attract high end • Market reaching maturity
market • Socio/economic indicator
• Synergies with group companies • PTA regulations
(BAL /Wateen / Wincom) • HR (FnF)
37 3
• Singtel buyout of major stake in
company
• Brand revamping
ZONG
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 Weakness

• China mobile financial strength • Perception of china “Cheap”


• Clear strategy to achieve market • Lack of international management
share experience
• Long term vision for profitability • Time of entry – 5th operator
• Decent brand • Issues with distribution structure
• China – Influence on government • Lack of Onnet volume

Opportunities Threats

• 3G makes sense for business • Unable to meet customer expectation


• Use of MVNO to add to revenues • Market reaching maturity
stream • Socio/economic indicator
• Buy out of operator “Insta” • Industry can strongly react
• Youth market • PTA regulations
• Team development

39 3
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

41 3
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.

43 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 short-
range (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

45 3
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 off-
net 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

47 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 on-
net 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
Calls
Off Fixed Line
Same Network International
Network Network

Ufone

Prepay 2.50 2.50 2.50 19.54

Public Demand 1.98 1.98 1.98

Mobilink

Jazz Budget 1.80 1.98 1.98 23

Jazz Easy 2.10 2.50 2.50 23

Jazz Octane 2.40 2.50 2.50 23

Jazz Ladies 2.50 2.50 2.50 23

Telenor

Djuice 2.82 3.44 3.44 Not available

Talk Shawk 2.3 2.3 2.3 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


Network Service Call
Below is the summary of
Accessibility Accessibility Completion
the Quality of Service Ratio
Survey conducted by (%) (%)
(%)
PTA.
Mobilink 99.8 98.9 97.2
Voice Call
Ufone 99.4 97.2 95.9
Ufone has a very high
Telenor 99.1 98.2 93.3
voice call service quality

49 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 Service


accessibility. Accessibility (%)

Mobilink 100

Ufone 99.9

Telenor 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.

VAS Mobilink Ufone Telenor

To Same Network 1.00 0.50 1.00

To Other Network 1.50 1.00 1.00

International SMS 5.00 1.50 5.00

MMS Activation
Not Available Free Free
Charges (Rs.)

MMS Per Incoming /


6.00 5.00
Outgoing Message 5.00

GPRS Per MB 18.00 15.00 15.00

Balance Inquiry Free 0.50 Free


Pricing Strategies Matrix

Low QUALITY High

Low
Economy Penetration

UFONE
P
TELENOR
R

I
Skimming Premium
C
WARID
E
JAZZ
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.

51 3
Market Share:

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:

• 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.

53 3
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

55 3
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

5.3 Investment
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.
57 3
6 FINDINGS

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.

59 3
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.
8 CONCLUSION

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.

61 3
9 REFERENCES

The information has been gathered through the various sources


including

• 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