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© ComNews
25.04.2007
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| Tore Johnsen, Telenor Pakistan (Pvt) Limited, Chief Executive Officer |
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Norway-based Telenor won a fifth consecutive license in Pakistan as a result of an April 2004 auction, and launched mobile services there in March 2005. The company has already invested around $800 million (or $291 million, excluding the license price) and is planning to invest another $400 million in 2007. By early 2007 Telenor had built 2,900 base stations (using the equipment of European vendors Nokia and Siemens, now Nokia Siemens Networks), which made the company the second largest mobile operator after Pakistan's Mobilink (which has 5,000 stations at that moment). The rest of the market players lag significantly behind: Ufone with 1,108 base stations, Warid Telecom 1,200 and Paktel 893. Tore Johnsen, General Director of Telenor Pakistan (Pvt) Ltd., explained to Leonid Konik, Editor in Chief of Standard, how Telenor managed to develop so quickly, and how the sole European investor in the Pakistan telecommunication sector feels in this competitive market.
- Mr. Johnsen, what motivated Telenor to take part in the mobile license tender for Pakistan back in 2004?
This market has a huge growth potential. Pakistan has everything an investor needs: a large population, a small mobile penetration rate, transparent regulations and the opportunity for 100 percent ownership of the operator company by a foreign investor (Telenor Pakistan (Pvt) Ltd. is fully owned by Telenor ASA).
- All mobile operators have a similar subscriber base structure, which is 99 percent pre-paid and only 1 percent contractual. Why?
This is due to the economic situation in the country - people want to control their mobile costs, and a pre-paid service enables them to do so. Also, subscription service requires a deposit payment from a subscriber, which not every Pakistani resident can afford. There is even the problem of delivering bills to contractual subscribers due to the underdeveloped Pakistani postal service. The situation with pre-paid services in Pakistan is not unique - it's typical of emerging markets, where people spend a significantly larger part of their revenue on mobile costs than in Europe.
- The subscription base data provided by mobile operators and the regulatory authority is quite different. How does Telenor Pakistan count its subscribers and what do you think of the competitors' counting policies?
We include subscribers in our statistics from the moment of their first call (or any other paid operation), and write them off after three months of "silence." At the end of 2006 we had 6.7 million subscribers (compared to 1.9 million subscribers at the end of 2005). PTA has never described its subscription-counting methods, therefore the data provided by the regulatory authority is not trustworthy. PTA claims that there are over 50 million mobile subscribers now in Pakistan, but in reality, according to our estimates, there are 40-42 million.
- Competition on the Pakistani mobile communications market exists mainly between pricing plans. The cost of a mobile minute has fallen to $0.02-$0.04, and the ARPU of mobile companies has decreased tenfold in the past two years. Do you see the opportunity for having a profitable business in the future?
The price on the local market is definitely important. But the other critical issue here is coverage. By the fall of 2006, Telenor Pakistan already had the second best mobile network in Pakistan in terms of coverage quality. The first on coverage is Mobilink, but it has been building its network for ten years while we started up only in early 2005. You are right - prices have dropped, but, taking the long-term perspective, it is important to keep building the network and managing its effectiveness from the standpoint of expenses. Even if tariffs are falling, there is still a way to cut expenses. And, by the way, our ARPU is growing: in 2005 it was $3.20 per month; by 2006 it went up to $4.80.
Telenor is in an altogether unique situation: we can make use of synergies since we work in neighboring countries within the region - Bangladesh, Thailand and Malaysia. We communicate with our colleagues on a regular basis, learn from each other and look for ways to reduce costs and launch new services. However, the copy-and-paste approach does not work because the national markets have significant differences. The first thing we do to reduce costs is to agree with our competitors on the joint use of cable towers for base stations. But for now we have only been able to reach an agreement with the smallest GSM operator, Paktel. The rest are worried that it will help us while doing damage to their business.
- On March 26, 2007, the Mobile Number Portability service was implemented in Pakistan. Major mobile operators Mobilink and Ufone claim that it was sponsored by Telenor and another new market player, Warid Telecom. Can you comment?
The decision to implement MNP in Pakistan was made by the government. Moreover, MNP is mentioned in the Mobile Cellular Policy that was prepared before Telenor came to Pakistan. Basically, with the launch of MNP, key market players may lose a number of subscribers, while users are given more of a choice. As you said, in Pakistan, only 1 percent of subscribers are post-paid, and pre-paid subscribers don't use MNP. Therefore, in a year, only a few hundred thousand users can shift to another operator, definitely not millions. That's why Mobilink and Ufone's anxiety is groundless, especially if they provide quality services. If they criticize MNP, then they must have problems of some kind.
Leonid Konik, Standard
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