TELENOR PAKISTAN

Business Scope
 Business Scope
Telenor’s Corporate DNA

At Telenor Pakistan, our lives are made up of our Corporate

DNA i.e. our Vision and Values. We believe that competencies
influences a person what he or she is.
Vision
“We exist to help our customers get the full benefit of
communications services in their daily lives”
The key to achieving this vision is a mindset where every one
of us works together. Making it easy to buy and use our
services. Delivering on our promises; being respectful of
differences; inspiring people to find new ways.
Telenor will be a driving force in modern communications and
customer satisfaction.
Function/Application:
• Mobile services is one of the most convenient and
popular modes of communication in the world today. It
connects millions around the globe. It provides services
like talk airtime, sms(text), mms and various internet
facilities.

Users:
• Telenor is truly customer centric. They believe in
understanding their customer’s needs which have
changed and are changing constantly therefore
continuously driving them to innovate in terms of
products and services. The users of Telenor comprise
Prepaid customers; youth/ Students, Women, Financially
Constraint and Postpaid customers; Corporate/ SME
Business they are in:

• Telenor is the provider of mobile communications services

worldwide. Provides entertainment as a support if its main
product. Telenor is also the largest provider of TV services
in the Nordic region.

Business they are not in:

• Telenor is not in the transportation services or fast moving

consumer goods business.
Added Value:

Telenor provides value added services in the form of:

• Bubble messages
• MMS/ SMS
• GPRS
• WAP portal
• International Sms
• Edge
• International direct dialing
Five Product Levels:

Core Product: Communication

• Basic Product: Telecommunication Service
• Expected Product: Consumer expects good network
coverage and faster connectivity.
• Augmented Product: Value addition includes mms,
EDGE, bubble messages, WAP portal
• Potential Product: Potential service includes bill
payment & easy load facility on its websites.
Telenor’s Future Consideration:

• Telenor is proud to build mobile communication infrastructure in

Pakistan and looks forward to combining its experience in
mobile technology with the local Pakistani high level of
competence. Telenor's primary aim is to offer top quality mobile
services and promote healthy competition in the mobile market.
Overview of The Telecom Sector of
Pakistan
 Telecom Act 1996, laid the foundations for de-regulation

 Fixed line de regulation was announced in 2003

 Mobile Cellular policy was implemented in 2004

 Deregulation led to healthy competition, investment friendly environment

and created greater employment

 The overall teledensity in the country has reached 23.1 percent at the end
of April 2006, as compared to mere 2.3 percent in 1999-2000
 Similarly, foreign investment in the telecom sector has crossed
US $ 1 billion during first three quarters of 2005-06
 When compared to Other South Asian countries Pakistan’s
telecom sector is on the second position in terms of growth.

Countries 2003 2004 2005 2006 (March)

Pakistan 4.3 6.3 11.9 23.1

India 7.1 8.9 11.5 12.8
Sri Lanka 12.7 16.6 23.4 27
Bangladesh 1.6 2 4.5 9
Nepal 1.8 2 3 3
 Telecom Share in GDP

•Telecom comes under the services sector and its share in the
services sector has increased from 3.1% in 2000-01 to 3.8% in
2005-06
•In the overall GDP, the share of the Telecom has reached 2%
in 2005-06, having increased from 1.6% in 2001-02
 Foreign Direct Investment in the Telecom sector

During 2005-06, telecom sector received over US $ 1.9 billion FDI and emerged as
the only sector of the economy to attract such a huge investment

Privatization proceeds of PTCL (US $ 1,184 million) and network expansion of other
telecom companies led to these large FDI flows in telecom

Telenor, and Warid were the major companies to make FDI in the telecom
infrastructure.
 Market Structure of the
Telecommunication Sector:

Wireless
local loop
Fixed line
4%
17%

Mobile
79%
Distribution Structure of the Cellular Sector:
Prepaid
Youth/ students, Post Paid
End Corporate/
Women, Financially
Users constraint SME

Third
Distribution Direct Franchsie,Sales and Party
Channel Sales Service Centers Chains

Retail Network

Company
 Influential Factors
Regulatory Stability:
• Telecom Act 1996, laid the foundations for de-regulation

• Fixed line de regulation was announced in 2003

• Mobile Cellular policy was implemented in 2004

• Activation tax for new cellular connections was reduced by 50% to Rs 500 in
June 2005 compared to Rs 2000 in the year 2002

• Mobile sector alone contributed 65% of the total tax contribution by telecom
sector
 Mobile handset theft: the government has implemented
central equipment identification register based on
international equipment identity system (imei).

 Investment friendly environment, telecom sector attracted

US $ 1.9 billion as FDI

 Implementation of mobile number portability in 2006.

 Decreasing inter connections rates in the market.

 Pakistan Telecommunication Authority regulates the

telecom operators. High entry barriers are there because of
the licensing approved by the PTA of Pakistan
• The government decided to deregulate the telecom sector
in AJ& K and this task was assigned to PTA and 4 leading
mobile operators were licensed for provision of services in
this territory. Before this Special Communication
Organization (SCO) has been exclusively been providing
Telecom services in AJ & K areas.

• Balochistan was declared as a priority area for telecom

development and number of regulatory measures were
taken to enhance telecom facilities in the province.
 Economic Factors:
• A recent study found that, in a typical developing country,
a rise of ten mobile phones per 100 people boosts GDP
growth by 0.6 percentage points.

• GDP growth of 8.4% for 2004/05 and 6.6% in 2005/06

• The per capita income of Pakistan also reached US $ 847,

registering a growth of 14% over the last year US $ 728.

• The telecom sector has generated employment

opportunities During 2006 almost 183,063 additional direct
and indirect jobs were created in the telecom sector
• Penetration in Pakistan has increased by 8% in five years-
translating into 0.5% GDP growth

 Telecom share in GDP increased from 1.6% in 2001/02 to 2%

in 2005/06

 Foreign direct investment has increased to $1.5 billion, the

highest ever in the country’s history. This year telecom sector
received 54.1% of the total FDI which is even higher than last
years 32.4%.

 To promote infrastructure development PTA introduced

separate infrastructure license for further growth of the
sector.
 During 2005/06 investment grew by 13.5% in the overall
telecom sector.

 PTA is urging the tax authorities to lessen the burden of

tax on the telecom sector which would help further growth
of the sector.

 It is expected that next year telecom companies would be

able to achieve 2.5% share in gdp instead of 2% in the
current year.

 Thus higher economic growth coupled with substantial FDI

in the telecom sector and declining unemployment will
result in increasing the use of telephone network in
Pakistan
• Market Size and Growth of the
Telecommunication Sector as a Whole

• Market Size and Growth of the Cellular

Sector for the past for years and Future 4
years Forecast
 Market Size and Growth of the Telecom Sector by Teledensity:

2002 2003 2004 2005 2006

Cellular 1.16% 1.62% 3.31% 8.29% 19.19%
Fixed Line 2.5% 2.69% 2.94% 3.43% 3.43%

Wireless - - - .17% .5%

local loop
Analysis:
 The overall teledensity has crossed 26.19% in June 2006
showing a growth of 120% over the last year.

 This increase has come from a high growth in mobile

penetration. Mobile penetration increased tremendously in
2006 and jumped from 8.3% in 2005 to 22.2% in 2006.

 The fixed line sector growth in the fixed line sector

remained stagnant during the year at 3.4% from 2004-05
to the same 3.4% in April 2006.

 The slow growth in the fixed line is mostly attributed to its

substitution with the competitive mobile services because
of their low prices, inherent mobility, bundled offers and
value Added services
• WLL phones are also seen to be expanding in the
country .This service was started in Pakistan in 2004 as
a new segment of the Telecom sector after deregulation

• 17 countries were awarded WLL licenses to operate in

14 regions of Pakistan.

• Out of these 14 companies 4 are operational and are

providing services in all four provinces of Pakistan;
namely Telecard, WorldCall, GreatBear and PTCL

• Presently 36% of the total population of Pakistan is

covered by WLL services. The WLL teledensity stood at .
16% in 2004-05 and rose to 0.66% in 2005-06.
Market Size and Growth for the past 4 years and
future trends – Number of Subscribers

Cellular 2003 2004 2005 2006

Prepaid 2,239,062 4,797,829 12,424,783 33,410,928

Postpaid 165,338 225,079 346,420 1,095,738
Total 2,404,400 5,022,908 12,771,203 36,778,462
Analysis

 The subscribers’ growth rate was 109% in 2003-04, 154% in 2004-05

and has crossed 170% in 2005-06. This explosive growth in the
subscriber base is mainly due to the deregulation.

 The growth in the mobile sector is mainly attributed to prepaid

customers as in the trend in comparable economies.

 The stable increase in prepaid customer base is due to the fact that
operators now focusing on:

 retaining customers,
 improving the quality of service,
 enhanced customer service,
 packages that concentrate on brand loyalty.

 For example: They are offering family and friend packages in the range
of Rs 0.5 to Rs 2 per minute, fractional minute billing, international
roaming, gprs, prepaid roaming, low cost, sms etc.
 Price erosion in the mobile sector e.g. Reduction in inter
connect charges and reduction in activation tax to rupees
500 per connection led to high market penetration. In
2002 it stood at Rs. 2000.

 The maximum on net Tariff were Rs 5.75 in 2005 and

have come down to Rs 3.0 in 2006 which in % terms is
48% reduction
 you can purchase a prepaid package at Rs. 200 to Rs. 150. Initially
a prepaid connection was priced at more than Rs. 1000.

 Sudden high growth in 2005-06 in both Postpaid and Prepaid

customers was due to the entry of two new mobile operators Warid
and Telenor

 Mobile players are segmenting their customers and announcing

packages accordingly to meet their needs.

 Recently examples include Jazz Octane and Dejuice focused on the

youth segment, talkshawk for financially constraint and students,
Ladies First by Mobilink for the female segment.
• Due to telecom deregulation in Balochistan, the
teledensity increased by 5.6% to 10.47% in 2006
showing growth of 87%.

• Market expansion to AJ&K AND NAs where mobile

operators have just been awarded license for provision
of services.

• Moreover, operators also extensively invested in erecting

their cell sites in new as well as already covered areas to
increase coverage.

• The number of franchises increased from 984 in 2004/05

to 1202 in 2005/06
• The mobile handset market has become very exciting.
Market segmentation in high end, middle end and low end
handsets is resulting in choice and affordability to all types
of customers.

• Increase in the number of subscribers for postpaid

packages is mainly because operators have launched
services like gprs/edge, mms, blackberry corporate
mobile email solution, mobile banking, ringback tones and
several other content based options.
 2007 2008 2009 2010

Prepaid 59,130,000 68,208,000 73,950,000 78,370,000

Postpaid 6,570,000 10,192,000 13,050,000 13,830,000

Total 65,700,000 78,400,000 87,000,000 92,200,000

 Currently the population of Pakistan is over 155million. If
we exclude 20% of the poor population and 30% children
(below the age of 10 years). We get a potential target
market of about 87 million

 So far cellular mobile companies have grabbed 34.5

million subscribers which is only 39% of the potential
target market.

 About 59% of the potential population is living in rural

areas. Mobile operators will focus on grabbing the
inaccessible areas and increasing their penetration by
expanding their networks

 In future, it is expected that post paid segment will grow

at a faster pace than prepaid segment converting a
portion of the prepaid segment to postpaid. For e.g. Post
paid packages aimed at the youth and students
Market Size and Growth for the past 4 years and future
trends- Revenue

2002-03 2003-04 2004-05 2005-06 2007 2008 2009 2010

19,758 27,849 48,880 90,057 316,411 377,574 364,182 385,949

• Revenues of the mobile sector have increased at an
average growth rate of 80% per year for the past two
years.

• Mobile ARPU has shown a declining trend resulting from

intense competition for acquisition of new subscribers
and retaining existing customers

• The ARPU dropped from 8% in 2004/05 to 5.7% in

2005/06. However drop in ARPU leads to greater market
penetration since it leads to affordability of the service
• The increase in revenues is attributed mainly to sharp
rise in number of mobile subscribers and reduction in
tariff. By lowering if Tariff the affordability of lower
income groups increases which leads to increased
revenue.

• Reduction in activation tax to rupees 500 resulted in

manifold increases in mobile penetration

• Increase per capita income to US $ 847 registering a

growth of 14% over the last year. It is expected to grow
further by 16% in 2007
 Mobile operators were awarded licenses to start their
services in Balochistan in 2005

 The population of Balochistan is 7.7 million and telecom

coverage is only 4.4 million.In future, large revenues will
be generated from Balochistan as mobile penetration
increases.
 Product Life Cycle (Telecommunication
Industry)
SERVICES INTRODUCTION GROWTH MATURITY DECLINE

Cellular        
Fixed Line        

WLL        

Cellular INTRODUCTION GROWTH MATURITY DECLINE

Prepaid         

Postpaid         
Distribution structure:
Distribution by Franchises and service centers
(combined)

.Total franchises by all operators grew by 60% in 2005 whereas it

grew by only 22% in 2006

 Operators including Paktel and Instaphone negatively affected this

growth since Instaphone started closing its franchises whereas Paktel
stopped giving official status to franchises and changed its policy with
freelance franchises concept
Internal Analysis
 Strengths

• Network quality & design

• Superior customer care
• Financial Strength
• Excellent Coverage & Distribution.
• Commercial Launch of LDI & mobile
services
• Contract with Siemens & Nokia
• Brand image of Quality
 Weaknesses
• Relatively low market share
• Low profit margins
• Negative cash flows in the initial years
 Opportunities
• Favorable Macroeconomic indicators
• low cellular market penetration
• Inefficiency & poor performance of other mobile
networks
• Co branding e.g Ufone with ABN AMRO
• Strategic Alliances & Infrastructure Sharing Facilities
• PTA initiatives
• E-commerce usage.
• Mobile Number Portability
• International Mobile Equipment Identity System
 Threats

• Rolling Customers
• Privatizations & deregulations- increased
competitions.
• Grey Traffic
• MNP mobile number portability
• Wireless technology at boom
• Public pay phones & calling cards usage where
network is not available
• Propagandas attacking brand image
Value chain for prepaid

Value Chain for Prepaid

TELENOR PAKISTAN
HEAD OFFICE

SIM DECODING

DATABASE ENTRY

PRINTING

MARKETING REGIONAL
DEPARTMENT SALE
MANAGER

DISTRIBUTORS

RETAILERS
After Sales
CUSTOMERS
Value chain for Postpaid

Value Chain for Postp

Customer’s activation
charges

Authorized
dealers
(Security
Code)

T
Calls E
L
Bills E Customer Service Center Online Payment Payment thru SMS
N (Customer payment)
O
Siemens R

Finance &
Accounts
Department
Key process Indicators
KPIS Industry Where are we Improvement Improvement
Benchmark Plan 1 Plan 2

Network Quality 40 % 55% Increase Cell Sharing

sites infrastructure

Relative Cost/ 50 % 55% Cut down on Collaborating

low price unnecessary with your
costs in the value forward channel
chain allies to reduce
their costs

Customer Care 10% 15% Increase the Highly efficient

number of Helpline
Customer Sales responses.
Centers. Feedback given
Enable within one hour
Complaint guarantee.
registry through
sms

New Product 15% 17% Design packages

Activity to cater the needs
of different
segments e.g.
women
Brand Loyalty 40% 45% Improve quality Increase
standards and marketing
provide superior campaigns and
Network Quality get your product
on the shelf

Distribution 40% 50% Increase the

number of
franchises and
increase coverage
to towns and
cities where no
cellular services
are available
Strategic cost Management
In a changing and competitive environment such as the deregulated
telecommunications market, a provider’s competitiveness and
attractiveness heavily depend on lean cost structures.

• Telenor’s management continuously analyzes each business and

cost center to determine potential efficiency improvements.

• In order to reduce dependency on the availability of a single

subcontractor, Telenor has selected TIBCO’s business process
management software. After the successful implementation, Telenor was
able to describe its experience and provide information on the real
business values achieved with the TIBCO solution.
TIBCO

TIBCO Software Inc. (NASDAQ:TIBX) is the leading independent business

integration software company in the world and a leading enabler of real time
business, helping companies become more cost-effective, more agile and more
efficient. TIBCO has delivered the value of real-time business, what TIBCO calls
The Power of Now®, to over 2,000 customers around the world and in a wide
variety of industries
Besides TIBCO solution, Telenor emphasizes on reducing costs in a quality
network by the following measures

Site sharing
Cost optimization features in the network, e.g. half rate
Spectrum efficiency (Spectrum efficiency is the optimized use of spectrum or
bandwidth so that the maximum amount of data can be transmitted with the
fewest transmission errors. In a cellular telephone network, spectrum efficiency
equates to the maximum number of users per cell that can be provided while
maintaining an acceptable quality of service (QoS).)
Ensuring sufficient quality based on market dynamics (different customer
segments / demands)
Exploring low cost rollout solutions for rural areas
Partnering with various organizations to utilize their space and reduce CAPEX
(CAPITAL EXPENDITURE)
Vision/Mission and Objectives
Vision Statement:
Our Corporate DNA

At Telenor Pakistan, our lives are made up of our Corporate DNA i.e. our Vision
and Values. We believe that competencies influences a person what he or she
is.
Our vision is simple: we exist to help our customers get the full benefit of
communications services in their daily lives.

Mission Statement :( proposed for Pakistan)

Telenor Pakistan is a customer focused business mobile service

operator/telecommunications Company that seeks competitive advantage in
quality and valued added service in both prepaid and postpaid categories
through state of the art technology. Telenor relies on building trusting
relationships with customers, owners, employees and society in general.
CORE VALUES

Telenor has three core values which are at the heart of and govern the
conduct of their employees, both internal and external. These are

Dynamic
Being dynamic means having insight and active involvement, coupled with a
capacity for implementation.

Innovative
Being innovative means continuously being on the lookout for new
opportunities for development and growth.

Responsible
Being responsible means raising realistic expectations, deliver as promised
and stay committed to the society which our group is part of.
CORE COMPETENCIES

Coverage
In just one year of operations in Pakistan, Telenor has expanded its
coverage to over 250 cities in Pakistan. This has been possible due to
heavy investment in infrastructure development and forgoing short term
profits.

Product Quality
Through the superior network design Telenor is able to provide its
customers with the highest quality cellular service in terms of reception,
coverage and value added services.

Large resource base

Telenor Pakistan is a subsidiary of the Telenor Group of Norway. This gives
the company a huge resource base in terms of financial and technological
assets compared to the competitors.

Distribution Network
Telenor has a competitive advantage over its competitors in terms of its
distribution network. The company has a very high level of retail
penetration, aimed at maximizing profits.
Business objectives

Objectives 2006-07 2015

ARPU $4 $6- $8

Market Share in terms of 10% 40%

Subscribers

Market Penetration 9% 30%

Market Share in terms of Revenue 7% 30%

EBITA 5% – 6% 10%

Unprompted Brand Awareness 20% 90%

STRATEGIC INTENT:

To be the leading customer oriented company providing top quality mobile
services
Profitable and sustainable growth
Competitive edge on value added services
Strong Brand Awareness

Key Issues:

Issue 1:
Maintain network quality

Issue 2:
Low market penetration

Issue 3:
Rolling Customers

Issue 4:
Untapped market segments- Women

Issue 5:
Mobile number portability
 Strategic Direction
• Building an organization with competency, capabilities and resource strengths

• Learn @ Telenor

• Developing Technical Know How in Employees

• Developing budgets to steer ample resources into critical value chain activities

• Creating strategy supportive policies and procedures

• Instituting best practices and a commitment to continuous improvement

• Installing support systems and Value added Services:

Segmentation and Positioning
Market Segmentation and Positioning

Segmentation is the process of dividing the total market for a good or

service into several smaller, internally homogenous groups. Since
Telenor is a customer oriented and quality driven company, it
segments its market on the basis of various different dimensions.
 Market Segmentation & Product Positioning

Market Segment Today Future 4 years Existing Profitability

Estimate Products %

Youth/ students 25% 27% Djuice, 29%

Talkshawk

Women 10% 20% TalkShawk 21%

Financially 40% 23% TalkShawk, 20%

Constraint Telenor Azadi

Corporate/ SME 25% 30% Post Paid 30%

Packages
 Companies positioning against
competition
Parameters Mobilink Telenor

Product Life Cycle Maturity Growth

Market share % 59% 7%

Coverage 900 cities 1100 cities

Product Portfolio Jazz Octane, Mobilink TalkShawk, Telenor

Indigo, Ladies First, Azadi, DJuice

Customer Base 17.2 million 3.6 million

Marketing Operations Excellent Average

Proposed Action Plan
PRODUCT

WHAT HOW WHO WHEN

Implementing •By increasing Telenor’s CEO •By the end

Mobile Number investment. also chairman of of 2007
Portability •By increasing MNP supervisory
budgetary board
allocation
•Joint ventures
.

Superior network •Investing heavily Telenor •By 2008.

Quality and in cell sites
Coverage •Sharing
infrastructure and
space with other
mobile operators
DISTRIBUTION

WHAT HOW WHO WHEN

To make •increase the •Telenor marketing As soon as

distribution a distribution and distribution possible by
competitive channels heads. the end of
advantage to reach •offer Fair 2009
as many people profitability for
and to cater to as channels
many cities as
possible
•high channel
loyalty

REPOSITIONING

WHAT HOW WHO WHEN

Telenor design Offer discounts •Marketing and •mid 2007
specific cards, creative heads of
packages to entertainment, telenor pakistan
appeal to cooking tips,
different health tips
growing through sms.
segments Remarkably low
-Women call rates
-Corporate/ .
SME
PRICING

WHAT HOW WHO WHEN

Low cost Revamping the Marketing heads of By the end of

leadership value chain and Telenor 2007
outsourcing high
cost producing
activities

MANAGEMENT

WHAT HOW WHO WHEN

Human resources Hiring the Telenor Pakistan As soon as it

Employees at competent staff can be done.
management and firing the
position incompetent staff
Tough screening
criteria
Multinational
standard salary to
be paid.
OPERATIONS

WHAT HOW WHO WHEN

Infrastructure Sharing Telenor Pakistan, Between 2007-

Sharing infrastructure and Mobilink, Warid, 2008
space with other Ufone
mobile operators